You live in Australia and want to try to make some money through interest rate arbitrage abroad. You notice the following rates quoted online:BidAUD1.1848/USDAUD1.2434/USDSpot exchange rate310-day Forward exchange rate310-day USD interest rate310-day AUD interest ratea. AUD 724,800O b. AUD 242,000C. AUD 219,261d. AUD 292,187AUD 203,1466.60% p.a.8.71% p.a.What will your profit (in AUD) be 310 days from now if you borrow AUD7 million and invest in the United States then convert back to the Australiandollar?O e.AskAUD1.1789/USDAUD1.2712/USD6.83% p.a.9.30% p.a.

Arbitrage is the risk less profit that can by earned by buying and selling in two markets and taking…

You live in Australia and want to try to make some money through interest rate arbitrage abroad. You notice the following rates quoted online: Bid Ask AUD1.1848/USD AUD1.1789/USD AUD1.2434/USD AUD1.2712/USD Spot exchange rate 310-day Forward exchange rate 310-day USD interest rate 310-day AUD interest rate 6.60% p.a. 8.71% p.a. O a. AUD 724,800 O b. AUD 242,000 O c. AUD 219.261 6.83% p.a. 9.30% p.a. What will your profit (in AUD) be 310 days from now if you borrow AUD7 million and invest in the United States then convert back to the Austra dollar?

You live in Australia and want to try to make some money through interest rate arbitrage abroad. You notice the following rates quoted online: Bid Ask AUD1.1848/USD AUD1.1789/USD AUD1.2434/USD AUD1.2712/USD Spot exchange rate 310-day Forward exchange rate 310-day USD interest rate 310-day AUD interest rate 6.60% p.a. 8.71% p.a. O a. AUD 724,800 O b. AUD 242,000 O c. AUD 219.261 6.83% p.a. 9.30% p.a. What will your profit (in AUD) be 310 days from now if you borrow AUD7 million and invest in the United States then convert back to the Austra dollar?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Munich to Moscow. On your post-graduation celebratory trip you decide to travel from Munich, Germany, to Moscow, Russia. You leave Munich with 15,900 euros in your wallet. Wanting to exchange all of them for Russian rubles, you obtain the following quotes Spot rate on the dollar/euro exchange rate $1.3121/€ Spot rate on the ruble/dollar exchange rate Rbl30.51/$ a. What is the Russian ruble/euro cross rate? b. How many rubles will you obtain for your euros? (Round to two decimal places.)
Use the information below to calculate the expected gain or loss on the carry trade strategy for an initial borrowed amount of 1,000,000 (you will have to determine the currency of borrowing). Keep at least two decimals in your calculations but round up or down at the end (enter the final answer without decimals). Current spot rate of Polish zloty (PLN/EUR) Expected future spot rate of of zloty (PLN/EUR) in three months Annualized three-month interest rate on Polish zloty (%) Annualized three-month interest rate on euros (%) 3,119,971 135,769 margin of error +/- 10 4.64 4.11 3.77 1.53
1. Assume you notice the following information. Assume you spend $1 million USD to create an arbitrage trading strategy. What is your profit is USD. Remember to consider the profit after you pay back your loan Spot (CAD/USD)=1.75 • 1 Year Forward (CAD/USD) = 1.65 • 1 Year Canadian interest rate of 3% in Canadian Dollars (CAD) • 1 Year US interest rate of 4% in US Dollars (USD) 592,484.85
TB SA Qu. 06-69 If you had borrowed $1,000,000.... Use the information below to answer the following question. Exchange Rate $ 1.60 €1.00 $1.58 € 1.00 So ( $/ €) F360 ($/C) Interest Rate is ic APR 28 4% If you had borrowed $1,000,000, traded them for euro at the spot rate, and invested those euros in Europe, how many euros will you receive in one year?
The following rates are available to you. (You may either buy or sell at these rates). Assume you have a $1,000,000 to trade. Quote for Japanese Yen US $ quote for British Pound Yen quote for British Pound Given this information, is triangular currency arbitrage possible? BOA Barclays Bank Daiwa Bank A. Yes, start by selling US dollars at Barclays Bank OB. Yes, start by selling British pounds at Daiwa Bank No, triangular currency arbitrage is not possible. O D. Yes, start by selling US dollars at BOA O C. US$ 0.009472/ US$ 1.3670/£ 142.45/£
someone help me understand what to do
Please use the data below, to answer the following question. BigMac price in the US BigMac price in Mexico Current Exchange Rate O overvalued by 14.29% O undervalued by 14.29% O overvalued by 12.50% O undervalued by 12.50% USD 3.50 12 MXN 80 Based on PPP, the MXN is 1 USD - MXN 20 140 15 16 (2 hp
For the below questions use these rates that your bank has quoted you: EUR/USD: 1.0175 – 1.0180 GBP/USD: 1.2065 – 1.2070 USD/CAD: 1.2930 – 1.2935 USD/JPY: 134.85 – 134.90 AUD/USD: .6905 - .6910 Calculate the following crosses: EUR/GBP EUR/JPY AUD/JPY GBP/CAD GBP/JPY CAD/JPY
Consider the situation of firm A and firm B. The current exchange rate is $2.00/£ Firm A is a U.S. MNC and wants to borrow £30 million for 2 years. Firm B is a British MNC and wants to borrow $60 million for 2 years. Their borrowing opportunities are as shown, both firms have AAA credit ratings. $ £ A $ 6 % £ 5 % B $ 7 % £ 4 % Explain how firm B could use the forward exchange markets to redenominate a 2-year £30m 4 percent pound sterling loan into a 2-year USD-denominated loan.
Hedging using Swap You want to borrow in U.S. dollars at a fixed rate of interest to match with your investment cash flows. Bank A offers you to borrow in US dollars at 7% or in Australian dollars at LIBOR + 0.5% per annum (adjusted for the differential impact of taxes). You found that Bank A also offer another customer who requires a floating-rate loan to borrow in US dollars at 7.5% or in Australian dollars at LIBOR + 2.0% per annum. Bank A can arrange a swap between you and the other customer with a net 20-basis-point spread. Design a swap that minimizes your borrowing costs and appears equally attractive to you and the other customer. What rates of interest will you and that customer end up paying? (Provide explanation, list your calculation process and use figure to illustrate the swap structure).
For the below questions use these rates that your bank has quoted you: EUR/USD: 1.0175 – 1.0180 GBP/USD: 1.2065 – 1.2070 USD/CAD: 1.2930 – 1.2935 USD/JPY: 134.85 – 134.90 AUD/USD: .6905 - .6910 Calculate the following crosses: GBP/CAD GBP/JPY CAD/JPY
After finishing your degree, you decide to go on a post-graduation celebration trip to the UK. You leave with 8,000€ in your pocket. You want to exchange all these € for the U.K. pounds (GBP). Have a look at the WSJ table attached here and identify the following quotes: Spot rate on the EUR: Spot rate on the U.K. pound (GBP): What is the GBP/EUR cross rate? How many U.K. pounds (GBP) will you get for your Euros?

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