ZuoTi.Pro
Question

QUESTION 16 Suppose the spot rate is $1.0000 - $1.0005 per euro and 3-month forward points are 5 and 15. The outright 3-month

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Fwd rate = SPot Rate + Fwd Points

Bid Rate = $1.0000 + 0.0005

= $ 1.0005

AsK Rate = $ 1.0005 + 0.0015

= $ 1.0020

Option C is correct

Pls comment, if any further assistance is required.

0 0
Add a comment
Know the answer?
Add Answer to:
QUESTION 16 Suppose the spot rate is $1.0000 - $1.0005 per euro and 3-month forward points...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • QUESTION 1 A U.S. MNC will receive 1 million Indian rupees (INR) in one year. The...

    QUESTION 1 A U.S. MNC will receive 1 million Indian rupees (INR) in one year. The current spot rate is INR75 /USD and the one year forward rate is INR320/USD. The annual interest rate is 5 percent in India and 0 percent in the United States. The dollar amount the firm will receive using the forward hedge is USD 75,000,000 USD 13,333 USD 3,125. None of the answers is correct. QUESTION 2 Suppose that Boeing Corporation exported a Boeing 747...

  • Canadian Dollar: Spot and Forward (C$/$) Euro: Spot and forward ($/€) Mid rates Bid Ask Mid...

    Canadian Dollar: Spot and Forward (C$/$) Euro: Spot and forward ($/€) Mid rates Bid Ask Mid rates Bid Ask spot 1.2645 1.2639 1.2651 1.2390 1.2387 1.2393 Forward 3-week 23 27 19 15 3-month 135 128 155 146 7a. How much $100 will cost you in Canadian Dollar and Euro? (Hint: you are buying USD). 7b. What are 3-week and 3-month forward bid and ask rate for Canadian Dollar and Euro? 7c. Based on information above, what are the profit margin...

  • QUESTION 18 The USD/CAD spot rate is USD 0.7500 - USD 0.7505. The 6-month forward points...

    QUESTION 18 The USD/CAD spot rate is USD 0.7500 - USD 0.7505. The 6-month forward points are 10-20. What is the outright 6-month forward quotation? 0 USD 0.7510 - USD 0.7520 0 USD 0.7490 - USD 0.7485 0 USD 0.7510 - USD 0.7525 None of the answers is correct. QUESTION 19 Assume you are a French investor. You see that stock for British Airways has a bid price of EUR 36 and an ask price of EUR 36.5 on the...

  • Dollar/Euro Forwards. Use the following spot and forward​ bid-ask rates for the U.S.​ dollar/euro ​(US$/euro€​) from...

    Dollar/Euro Forwards. Use the following spot and forward​ bid-ask rates for the U.S.​ dollar/euro ​(US$/euro€​) from December ​10, 2010, to answer the following​ questions: a. What is the​ mid-rate for each​ maturity? b. What is the annual forward premium for all​ maturities? c. Which maturities have the smallest and largest forward​ premiums? Period Bid Rate Ask Rate spot 1.32311.3231 1.32321.3232 1 month 1.32301.3230 1.32311.3231 2 months 1.32281.3228 1.32291.3229 3 months 1.32241.3224 1.32271.3227 6 months 1.32151.3215 1.32181.3218 12 months 1.31941.3194 1.31981.3198...

  • Suppose the current USD/euro exchange rate is 1.2000 dollar per euro. The six month forward exchange...

    Suppose the current USD/euro exchange rate is 1.2000 dollar per euro. The six month forward exchange rate is 1.1950. The six month USD interest rate is 1% per annum continuously compounded. Estimate the six month euro interest rate (expressed continuously compounded). Assume six months is 0.5 years.

  • Suppose the spot rate and the 1-year forward rates for the euro are €0.88/$ and €0.95/$...

    Suppose the spot rate and the 1-year forward rates for the euro are €0.88/$ and €0.95/$ (i.e. 0.95 euros per dollar). (2 points) Is the euro expected to get stronger or weaker? Why? (3 points) What would you estimate is the difference between inflation rates in the US and Europe (i.e., inflation(US) – inflation(Europe))?

  • QUESTION 9 The USD/CAD spot rate is USD 0.7500 - USD 0.7505. The 6-month forward points...

    QUESTION 9 The USD/CAD spot rate is USD 0.7500 - USD 0.7505. The 6-month forward points are 10-20. What is the outright 6-month forward quotation? 0 USD 0.7510 - USD 0.7520 0 USD 0.7490 - USD 0.7485 0 USD 0.7510 - USD 0.7525 None of the answers is correct.

  • Question 4 (total of 50 points) A. Use Table 4.1 for the spot and forward bid-ask...

    Question 4 (total of 50 points) A. Use Table 4.1 for the spot and forward bid-ask rates for the Japanese yen/U.S dollar (/S) exchange rate to answer the following questions. Table 4.1. Spot and Forward Bid-ask Rates Period Days Forward Bid Rate Ask Rate spot l month 6 months 24 months 30 180 720 114.23 113.82 112.05 106.83 114.27 113.87 112.11 106.98 1. Calculate the mid-rates from the bid-ask rate quotes 2. Calculate the forward premium on the different maturities...

  • The spot market rate for the euro is 1.4059 Canadian dollars per euro. The 3-month futures...

    The spot market rate for the euro is 1.4059 Canadian dollars per euro. The 3-month futures (forward) rate on the euro is 1.4147 Canadian dollars per euro. The yield on a 3-month Canadian government security is 1.16 percent (0.0116 decimal), annual percentage rate (APR). The yield on a 3-month euro area security is 0.24 percent (0.0024 decimal), annual percentage rate (APR). Show that interest rate parity (IRP) does not hold by solving for the forward rate that ensures IRP. How...

  • Suppose the one-year forward $1€ exchange rate is $1.7 per euro and the spot exchange rate...

    Suppose the one-year forward $1€ exchange rate is $1.7 per euro and the spot exchange rate is $1.8 per euro. What is the forward premium on euros (the forward discount on dollars)? The forward premium on euros is percent. (Give your answer as a percentage with one decimal and do not forget a negative sign, if appropriate.)

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT