X an indian company wishes to borrow usd atfixed rate. Y, a us company wishes to borrow inindian rupee. The principal amount is $10 millionand the current exchange rate js rs 69. Theyhave been quoted the following rate of interestloan.per annum for a 3yearINRUSDcompany XCOMPANY Y. 10%.8.5%.6.5%7.3%Design a swap that will nwt the swap dealer 10basis points per annum and aplit the netadvantage between company X and Y in theratio of 2:1.Show the cash flow to company X, company Yand the swap dealer over the lift of the swap.

Cross-currency swaps: Cross-currency swaps are over the counter in a form of an agreement between…

Answered: X an indian company wishes to borrow…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Suppose that Banco Bradesco in Brazil would like to enter a swap for USD100,000 three months from now for six months and the following quotes are available. Which of the following statements correctly describes the swap? Exchange Spot Rate BRL/USD 5.05/25 3-month 6-month 12/23 25/36 9-month 47/58 Banco Bradesco buys USD at 5.48 in 3 months' time; and buys BRL at 5.52 in 9 months' time Banco Bradesco buys USD at 5.17 in 3 months' time; and sells BRL at 5.83 in 9 months' time Banco Bradesco buy USD at 5.48 in 3 months' time; and sells BRL at 5.3 in 6 months' time Banco Bradesco buys USD spot at 5.05; and sells BRL at 5.61 at in 6 months' time
Question 2 Suppose that you are working for ANZ Bank as a foreign exchange trader and are currently exploring the opportunity of engaging a cover interest arbitrage possibility. You can invest New Zealand Dollar (NZD) 10,000 or British pound (GBP) 10,000. You faced the following exchange rate and interest rate quotes. Sport rate (NZD/GBP) One-year forward rate (NZD/GBP) One-year New Zealand 2.7450-2.7550 2.6450-2.6550 Interest rate 7.75%-8.25% One-year British interest Rate 3.75%-4.25% a) Show how to realize Covered interest arbitrage (CIA), assuming you want to realize in term of NZD and determine the arbitrage profit/losses. b) the arbitrage profit/losses. Assume that you want to realize in term of GBP. Show the CIA process and determine
Question 24 Suppose the spot rate is A$1.77/GBP. An Audi can be purchased in Sydney, Australia, for A$30,000 or in London, United Kingdom, for £17,860. The real interest rate is 3.5% p.a. for AUD and 1.5% for GBP, a) Calculate the real exchange rate of Sydney Audi per London Audi Is the real exchange rate consistent with the prediction of the absolute PPP? Explain b) Suppose the real interest parity holds, calculate the expected real exchange rate of per London Audi. Will the change in the real exchange rate lead to an increase in the Australia? Explain. y Audi ports of Edit View Insert Format Tools Table 12pt Paragraph BIU AV2v T²V 2 120 ***
H1.
2. Suppose that the term structure of interest rates is flat in the United States and Australia. The USD interest rate is 7% per annum and the AUD rate is 9% per annum. The current value of the AUD is 0.62 USD. Under the terms of a swap agreement, a financial institution pays 8% per annum in AUD and receives 4% per annum in USD. The principals in the two currencies are $12 million and 20 million AUD. Payments are exchanges every year, with one exchange having just taken place. The swap will last two more years. What is the value of the swap to the financial institution? Assume all interest rate are continuously compounded.
24-A company can borrow in OMR at a rate of 5% per annum in Oman (or) in the US at a rate of 6% per annum. The current rate of exchange is OMR 2.5000 = $1. What is the forward exchange rate for delivery in a year's time? (consider the first 4 decimals to select the correct answer) a. None of the options b. Forward exchange rate is OMR 2.5238/4 c. Forward exchange rate is OMR 2.4746/$ d. Forward exchange rate is OMR 2.4764/$
Company A (a U.S. MNC) wants to borrow £10,000,000 at a fixed rate for five year. Company B (a U.K. MNC) wants to borrow $16,000,000 at a fixed rate for five year. Today's exchange rate is £1- $1.6. The information below summarizes what each company can do without using swaps. Company A Company B $ Loans 8 10.6 £ Loans 11.6 12.4 If Company A wants to save 0.3% of the £10,000,000 loan through a Swap Bank, and If Company B wants to save 0.2% of the $16,000,000 loan through a Swap Bank. How much can the Swap bank earn on pound (£) loans (in terms of %) after meeting Company A and Company B's demand? (if your answer is 1.34%, just enter "1.34". If your answer is -1.34%, just enter"-1.34").
Sir plz help me so urgently plz
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Assume the following information: 90-day U.S. interest rate 90-day Malaysian interest rate 3% 5% 90-day forward rate of Malaysian ringgit Spot rate of Malaysian ringgit $0.394 $0.398 Assume that the Santa Barbara Co. in the United States will need 250,000 ringgit in 90 days. It wishes to hedge this payables position. Would it be better off using a forward hedge or a money market hedge? Substantiate your answer with estimated costs for each type of hedge. Do not round intermediate calculations. Round your answers to the nearest dollar. The firm will pay out $ in 90 days if it uses the forward hedge and $ if it uses the money market hedge. Thus, it should use the -Select- hedge.
Question A .Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line

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