If a currency’s spot rate market is _, its exchange rate is likely to be to...
If a currency’s spot rate market is _, its exchange rate is likely to be to a single large purchase or sale transaction.
A) liquid; highly sensitive B) illiquid; insensitive C) illiquid; highly sensitive D) none of the above.
Homework Answers
C) illiquid ; highly sensitive
Reason : If the market is illiquid then a single transaction will be highly sensitive in any market, including currency market.
Add Answer to:
If a currency’s spot rate market is _, its exchange rate is
likely to be to...
Which of the following is NOT true with respect to spot market liquidity? If a currency...
Which of the following is NOT true with respect to spot market liquidity? If a currency is illiquid, an MNC is typically able to quickly purchase that currency at a reasonable exchange rate. The more willing buyers and sellers there are, the more liquid a market is. A currency's liquidity affects the case with which an MNC can obtain or sell that currency The spot markets for heavily traded currencies such as the Japanese yen are very liquid
QUESTION 1: Suppose that the current spot exchange rate is GBP1= €1.50 and the one-year forward...
QUESTION 1: Suppose that the current spot exchange rate is GBP1= €1.50 and the one-year forward exchange rate is GBP1=€1.60. One-year interest rate is 5.4% in euros and 5.2% in pounds. If you have EUR1,000,000, what is the Covered Interest arbitrage profit in EUR? QUESTION 2: Suppose that the current spot exchange rate is GBP1= €1.50 and the one-year forward exchange rate is GBP1=€1.60. One-year interest rate is 5.4% in euros and 5.2% in pounds. If you conduct covered interest...
2. If I use the market approach to exchange rate forecasting, which of the following would I use to predict future spot...
2. If I use the market approach to exchange rate forecasting, which of the following would I use to predict future spot rates. a. Past spot rates b. GNP differences between countries c. Forward Rates d. Today’s rate is the expected future rate e. Charting techniques 3. A large government deficit relative to GDP, a high rate of money expansion accompanied by fixed exchange rates, along with substantial government expenditures are some of the common characteristics of _________ risk. a.exchange...
Market segmentation and asymmetric information would help explain, which of the following: Select one: a. foreign...
Market segmentation and asymmetric information would help explain, which of the following: Select one: a. foreign investors do not have capital to invest b. international investors lack skills to do research c. domestic investors lack skills to do research d. foreign investors lack information about the local markets and firms A Multinational enterprise can ________ its ________ by acquiring access to markets which are less illiquid as well as less segmented than its own. Select one: a. decrease; Marginal Cost...
22 The spot ask USD/GBP exchange rate is $1.89 - £100. The spot bid USD/GBP exchange rate is $1.88 - £100. What is the...
22 The spot ask USD/GBP exchange rate is $1.89 - £100. The spot bid USD/GBP exchange rate is $1.88 - £100. What is the profit (loss) if an investor buys $10,000,000 worth of British pounds and simultaneously sell the pounds proceeds of that purchase? points Multiple Choice 302.50:11 0 ($52,910) 0 None of the options 0 (552,632) 0 $52,910 0 $52,632 The dollar-euro exchange rate is $1.40 - €1.00 and the dollar-yen exchange rate is 110 - $1.00. What is...
The current spot exchange rate is $1.45/£. The three-month forward rate is $1.40/£. An investor shorts...
The current spot exchange rate is $1.45/£. The three-month forward rate is $1.40/£. An investor shorts £1,260. At maturity, the spot rate is $1.50/£. The gain or loss (−) on this transaction is: Multiple Choice $126. £126. −$126. None of the options. −£126.
If the spot exchange rate for the US/Canadian dollar rate was 1.0150 in 2011 and risk-free...
If the spot exchange rate for the US/Canadian dollar rate was 1.0150 in 2011 and risk-free rate was 3.5% in Canada and 2.5% in US, what would be the expected exchange rate in 2013? A. -$0.9955 B. $0.9955 C. $1.0349 D. -$1.0349 E. none
Use this information to answer the question below: The "spot rate" (current exchange rate) is Z2.01/$...
Use this information to answer the question below: The "spot rate" (current exchange rate) is Z2.01/$ The one-year forward rate is Z2.03/$ The annual risk-free borrowing/investing rate in the U.S. is 2.92% The annual risk-free borrowing/investing rate in Country Z is 5.91% In one round of arbitrage trades, how much money can you make by borrowing in one market and simultaneously investing in the other? Assume that you are starting out with $1,000,000 and that there are no transaction costs....
How can a MNC utilize the Spot Market Rate to facilitate the exchange of currencies.
How can a MNC utilize the Spot Market Rate to facilitate the exchange of currencies.
a) Calculate the expected spot rate in 6 months assuming that the interest rate parity between the two countries holds....
a) Calculate the expected spot rate in 6 months assuming that
the interest rate parity between the two countries holds.
b) Calculate the expected value of the sales proceeds in NZD
using the expected spot rate computed in (a) above.
c) Calculate and value of the proceeds from the sale if the
company enters into a forward rate agreement.
d) Explain and calculate the net proceeds receivable by Brian's
company if money market hedge is used.(Show
workings)
e) Based on...
Which of the following is NOT true with respect to spot market liquidity? If a currency is illiquid, an MNC is typically able to quickly purchase that currency at a reasonable exchange rate. The more willing buyers and sellers there are, the more liquid a market is. A currency's liquidity affects the case with which an MNC can obtain or sell that currency The spot markets for heavily traded currencies such as the Japanese yen are very liquid
22 The spot ask USD/GBP exchange rate is $1.89 - £100. The spot bid USD/GBP exchange rate is $1.88 - £100. What is the profit (loss) if an investor buys $10,000,000 worth of British pounds and simultaneously sell the pounds proceeds of that purchase? points Multiple Choice 302.50:11 0 ($52,910) 0 None of the options 0 (552,632) 0 $52,910 0 $52,632 The dollar-euro exchange rate is $1.40 - €1.00 and the dollar-yen exchange rate is 110 - $1.00. What is...
a) Calculate the expected spot rate in 6 months assuming that
the interest rate parity between the two countries holds.
b) Calculate the expected value of the sales proceeds in NZD
using the expected spot rate computed in (a) above.
c) Calculate and value of the proceeds from the sale if the
company enters into a forward rate agreement.
d) Explain and calculate the net proceeds receivable by Brian's
company if money market hedge is used.(Show
workings)
e) Based on...
Most questions answered within 3 hours.
-
INK Ltd is grocery retailer with 103 shops around South
Australia and Tasmania. The company has...
asked 2 minutes ago -
HOW BEER IS MADE
The beer making process is an art. It takes time, patience and...
asked 3 minutes ago -
What two methods could be used to purify the dimethyl
fumarate?
Based on the 12 Principles...
asked 12 minutes ago -
Reflect upon the readings and videos as well as our Media Monday
discussion. Integrating concepts from...
asked 17 minutes ago -
1. A cylindrical capacitor with A = 0.01, B = 0.1 and a length
of 5...
asked 24 minutes ago -
Explain how taking an SGLT-2 inhibitor, along with taking
insulin leads to ketoacidosis in people who...
asked 33 minutes ago -
Show the truth table of the
gates needed to control the PISO internal FF, has a...
asked 36 minutes ago -
If X ~ N(50; 100); Determine the value of '' k '' for both
situation:
a)...
asked 55 minutes ago -
In paired t-test, what's the difference between using pooled
variance and using the standard deviation of...
asked 55 minutes ago -
What are the major ethical theories, and how do they apply to
the role of a...
asked 56 minutes ago -
''Driving the call for multilateralism in trade at the summit
was Chinese President Xi Jinping, whose...
asked 49 minutes ago -
Present one method for changing health behavior that you think is
particularly effective.
Describe how one...
asked 58 minutes ago