Homework Answers
Ans is A
Forward interest rate=spot interest rate(1+0.04)/(1+i)
i=(1.04*7/7.5)-1=0.03
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ose the Mexican peso is trading in the spot market at 7 pesos per dollar, and...
Suppose the Mexican peso is trading in the spot market at 7 pesos per dollar, and...
Suppose the Mexican peso is trading in the spot market at 7 pesos per dollar, and the market expects a 5% depreciation or the peso over the next year what does this imply about the forward market rate if uncovered Interest Rate Parity holds? 6.65 pesos per dollar 7.7 pesos per dollar 7 pesos per dollar 7.35 pesos per dollar
2. Assume the following information: Spot rate of Mexican peso : $.100 180-day forward rate of Mexican peso : $.098 180-...
2. Assume the following information: Spot rate of Mexican peso : $.100 180-day forward rate of Mexican peso : $.098 180-day Mexican interest rate : 6% 180-day U.S. interest rate : 5% a) What would be the return to a Mexican investor who has 1,000,000 Mexican pesos from using covered interest arbitrage? (i.e. the Mexican investor will convert the peso into U.S. dollar at the spot rate and invest it in the U.S. for 180 days, and simultaneously sell a...
Assume the following information: Spot rate of Mexican peso : $.100 180-day forward rate of Mexican...
Assume the following information: Spot rate of Mexican peso : $.100 180-day forward rate of Mexican peso : $.098 180-day Mexican interest rate : 6% 180-day U.S. interest rate : 5% a) What would be the return to a Mexican investor who has 1,000,000 Mexican pesos from using covered interest arbitrage? (i.e. the Mexican investor will convert the peso into U.S. dollar at the spot rate and invest it in the U.S. for 180 days, and simultaneously sell a U.S....
The Mexican peso spot exchange rate is 12.75 peso per dollar. The nominal annual interest rate...
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In the spot market, 11.1 pesos can be exchanged for 1 U.S. dollar. A pair of...
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a. Gold Is $350 per ounce In the United States and 2.800 pesos per ounce In Mexico. The nominal exchange rate between U.S. dollar and Mexican pesos that is Implled by the PPP theory Is: pesos. b. Mex...
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Today’s spot rate of the Mexican peso is $.10. Assume that purchasing power parity holds. The...
Today’s spot rate of the Mexican peso is $.10. Assume that purchasing power parity holds. The U.S. inflation rate over this year is expected to be 7 percent, while the Mexican inflation over this year is expected to be 3 percent. Carolina Co. plans to import from Mexico and will need 20 million Mexican pesos in one year. Determine the expected amount of dollars to be paid by the Carolina Co. for the pesos in one year.
Question 4 (1 point) Suppose 1 Mexican Peso equals 0.049 US dollars in the spot market....
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
At today’s spot exchange rates to one US dollar can be exchanged for 12 Mexican pesos...
At today’s spot exchange rates to one US dollar can be exchanged for 12 Mexican pesos or for 111.83 Japanese yen. Your pesos that you would like to exchange for yen. What is the cross rate between the yen and the pesos. That is how many Jan would you receive for every peso exchange?
At today's spot exchange rates 1 U.S. dollar can be exchanged for 10 Mexican pesos or...
At today's spot exchange rates 1 U.S. dollar can be exchanged for 10 Mexican pesos or for 110.19 Japanese yen. You have pesos that you would like to exchange for yen. What is the cross rate between the yen and the peso; that is, how many yen would you receive for every peso exchanged? Round your answer to two decimal places.
Suppose the Mexican peso is trading in the spot market at 7 pesos per dollar, and the market expects a 5% depreciation or the peso over the next year what does this imply about the forward market rate if uncovered Interest Rate Parity holds? 6.65 pesos per dollar 7.7 pesos per dollar 7 pesos per dollar 7.35 pesos per dollar
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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
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