You have the following financial market information. You also have 1.88 million Australian dollar (A$) or 3.14 million Thai baht (THB) to make a profit due to covered interest arbitrage (CIA). Calculate the profit in A$ or THB if the CIA opportunity exists in the market. (enter the whole number without sign and symbol) Bid price Ask price A$0.0464 A$0.0682 THB spot rate THB one-year forward rate A$0.0425 A$0.0634 A$ spot rate THB22.4037 THB24.2606 A$ one-year forward rate THB27.6528 THB29.6897 Deposit rate Loan rate Interest rate on A$ 2.70% 4.58% Interest rate on THB 6.98% 8.23%
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- Assume the bid rate of an Yen dollar is $ 1.8 while the ask rate is $ 3.5 at Arab Bank.Assume the bid rate of an Yen dollar is $3.4 while the ask rate is $5.7 at Palestine Bank. Given this information, what would be your gain if you use $8876.7 and execute locational arbitrage? =8876.713.5^ * 3.4b =8876.7/5.7^ * 3.5c =8876.7/3.4^ * 1.8d = 8876.7 /3.5^ * 5.7Assume the following information: Bid price of Singapore dollar Ask price of Singapore dollar Marcus Bank $0.748 $0.750 $4,000.00. $5,347.59. $2,000.00. $2,666.67. Truist Bank $0.752 $0.753 Given this information, is locational arbitrage possible? If so,compute the profit from this arbitrage if you had $1,000,000 to use.Suppose that you have the following utility function: U=E(r) – ½ Aσ2 and A=3 Suppose that you have $10 million to invest for one year and you want to invest that money into ETFs tracking the S&P 500 (US) and S&P/TSX 60 (Canada) index, which are often used as proxies for the US and Canadian stock markets, respectively, and the Canadian one-year T-bill. Assume that the interest rate of the one-year T-bill is 0.35% per annum. You have found two ETFs that you are interested in. From a set of their historical data between 2001 and 2019, you have estimated the annual expected returns, standard deviations, and covariance as follows: ETFUS : E(r)= 0.070584 0.173687 ETFCDA : E(r)= 0.073763 0.16816 Covariance between ETFUS and ETFCDA = 0.02397 Answer the following questions using Excel: What is the optimal portfolio of ETFUS and ETFCDA? Also submit an Excel file to show your work.
- Suppose that you have the following utility function: U=E(r) – ½ Aσ2 and A=3 Suppose that you have $10 million to invest for one year and you want to invest that money into ETFs tracking the S&P 500 (US) and S&P/TSX 60 (Canada) index, which are often used as proxies for the US and Canadian stock markets, respectively, and the Canadian one-year T-bill. Assume that the interest rate of the one-year T-bill is 0.35% per annum. You have found two ETFs that you are interested in. From a set of their historical data between 2001 and 2019, you have estimated the annual expected returns, standard deviations, and covariance as follows: ETFUS : E(r)= 0.070584 0.173687 ETFCDA : E(r)= 0.073763 0.16816 Covariance between ETFUS and ETFCDA = 0.02397 Answer the following questions using Excel: Draw the opportunity set offered by these two securities (with increments of 0.01 in weight). Hint: In Excel, calculate the portfolio expected return and…Suppose that you have the following utility function: U=E(r) – ½ Aσ2 and A=3 Suppose that you have $10 million to invest for one year and you want to invest that money into ETFs tracking the S&P 500 (US) and S&P/TSX 60 (Canada) index, which are often used as proxies for the US and Canadian stock markets, respectively, and the Canadian one-year T-bill. Assume that the interest rate of the one-year T-bill is 0.35% per annum. You have found two ETFs that you are interested in. From a set of their historical data between 2001 and 2019, you have estimated the annual expected returns, standard deviations, and covariance as follows: ETFUS : E(r)= 0.070584 0.173687 ETFCDA : E(r)= 0.073763 0.16816 Covariance between ETFUS and ETFCDA = 0.02397 Answer the following questions using Excel: Determine your optimal asset allocation among ETFUS , ETFCDA , and T-bill, in percentage and in dollar amounts. Also submit an Excel file to show your…Assume the bid rate of a Canada dollar is A$.271 while the ask rate is A$.273 at Bank A. Assume the bid rate of the Canada dollar is A$.265 while the ask rate is A$.266 at Bank B. Given this information, what would be your gain if you use A$2,500,000 and execute locational arbitrage? That is, how much will you end up with over and above the A$2,500,000 you started with? Group of answer choices A$ 46,992 A$ 65,789 - A$ 65,789 A$ 18,315 - A$ 46,992
- Consider the following situation. It costs $1.2900 to purchase £1 for immediate delivery. UK interest rates are 0.75% p.a. US interest rates are 1.5% p.a. What must be the 1 year forward rate at which you can purchase £ with $? Assume that there is no default risk, no transaction costs, no bid-ask spreads, etc. Provide your answer to 4 decimatplaces, for example, if you think the answer is 1.2900 $/£, enter '1.2900' Answer:Need help with this exercise, with clear formula pleaseHow to solve this problem? plz solve it step by step with formulas, thank u! (which one is the risk-free rate? 1% or 2%) Options on Indexes and Currencies Example Suppose that the current exchange rate of AUD to CAD is 1.2 AUD/CAD and o = 0.4463. Find the price of American put option to sell CAD for AUD at K = $1.1 AUD/CAD before or at half a year from now. Assume that the risk-free rates in Canada and Australia are 2% and 1%, respectively. Find the price of the American call option today by using the two period binomial model.
- You are trader at Tiger Capital. Todays market (bid-ask) rates for the number of USD per EUR are as follows:Spot rate: 1.1250 - 1.1254 USD = EUR 1.0 3 month forward rate: 1.1055 - 1.1060 USD = EUR 1.0 You think (i.e., have a hunch) that the EUR will weaken against the USD over the next 3 months and decide to do a trade today to exploit your hunch. Specifically, you sell 10 million EUR in the 3 month forward market today. You leave that position for 3 months. In 3 months from today, the spot exchange rate (number of USD per EUR) turns out to be 1.1100. How much profit or loss have you made? Give your answer to the nearest USD and if it is a loss, enter your amount with a MINUS sign.Assume the bid rate of a Norwegian krone is $0.1042 while the ask rate is $.1094 at Bank A. Assume the bid rate of the Norwegian krone is $.0999 while the ask rate is $.1039 at Bank B. Given this information, what would be your gain if you use $2,000,000 and execute locational arbitrage? That is, how much will you end up with over and above the $2,000,000 you started with? $6,352 $5,775 $5,197 $6,064 $5,486please answer the question2 with the data in question1