Question 4 (1 point) Suppose 1 Mexican Peso equals 0.049 US dollars in the spot market. Six-month Mexican government debt has an annualized return of 0.055 (and thus a 6-month periodic return of {rm/2)). Six-month U.S. government debt has an annualized return of 0.02 and a periodic return of (rd/2). If interest rate parity holds, what is the value of 1 Mexican Peso in US dollars U.S. in the 180-day forward market? AAP
3.1) Assume that 90-day U.S. securities have a 2.4% (rh) annualized interest rate whereas 90-day Swiss securities have a 3%(rf) annualized interest rate. In the spot market, 1 U.S. dollar can be exchanged for 1.15 Swiss francs. If interest rate parity holds, what is the 90-day forward rate exchange between U.S. and Swiss francs? is the Swiss franc selling at a premium or discount on the forward rate?
Suppose the spot exchange rate for the Canadian dollar is Can$1.07 and the six-month forward rate is Can$1.09. a. Which is worth more, a U.S. dollar or a Canadian dollar? O U.S. dollar Canadian dollar b. Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is Can$2.60? (Round your answer to 3 decimal places, e.g., 32.161.) Cost in U.S. dollars c. Is the U.S. dollar selling at a...
Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.011, while in the 180-day forward market 1 Japanese yen = $0.0118. 180-day risk-free securities yield 1.4% in Japan. What is the yield on 180-day risk-free securities in the United States? Do not round intermediate calculations. Round your answer to two decimal places.
Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.011, while in the 180-day forward market 1 Japanese yen = $0.0112. 180-day risk-free securities yield 1.30% in Japan. What is the yield on 180-day risk-free securities in the United States? Do not round intermediate calculations. Round your answer to two decimal places.
Quantitative Problem: Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.009, while in the 180-day forward market 1 Japanese yen = $0.0093. 180-day risk-free securities yield 1.3% in Japan. What is the yield on 180-day risk-free securities in the United States? Do not round intermediate calculations. Round your answer to two decimal places.
Quantitative Problem: Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.009, while in the 180-day forward market 1 Japanese yen = $0.0096. 180-day risk-free securities yield 1.50% in Japan. What is the yield on 180-day risk-free securities in the United States? Do not round intermediate calculations. Round your answer to two decimal places. %?
1. Assume the following information: Spot rate of Canadian dollar : $.80 90-day forward rate of Canadian dollar : $.79 90-day Canadian interest rate : 4% 90-day U.S. interest rate : 2.5% a) What would be the return to a U.S. investor who used covered interest arbitrage from investing in Canada? (assume the investor invests $1,000,000). Does the return exceed the return from investing in the U.S. over the 90-day period? Is it worthwhile for the U.S. investor to invest...
Assume the following information: Spot rate of Canadian dollar : $.80 90-day forward rate of Canadian dollar : $.79 90-day Canadian interest rate : 4% 90-day U.S. interest rate : 2.5% a) What would be the return to a U.S. investor who used covered interest arbitrage from investing in Canada? (assume the investor invests $1,000,000). Does the return exceed the return from investing in the U.S. over the 90-day period? Is it worthwhile for the U.S. investor to invest in...
ose the Mexican peso is trading in the spot market at 7 pesos per dollar, and the forward market sells the peso at 7.5 per dollar. It interest rates in the United States are 4%, what are they in Mexico if Interest Rate Parity holds? Round to ity holds nearest tenth of a percent. O 3.1% 7.1% O 15.1%