Homework Answers
Ans 21) Rinaldo is engaging in arbitrage. Correct answer is 4th option .
Ans 22) Israeli investor will buy at 19 shekel and sell at $4.45. Once we exchange the dollar into shekel one will get $4.45 * 3.7
= 16.465 shekel
Thus investor will make loss of 2.535 shekel. (19 - 16.465)
Correct answer is option 2.
Other two is rightly selected.
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QUESTION 21 Assume that the yen/dollar exchange rate quoted in London at 3:00 p.m. is V115...
Question Completion Status: QUESTIONS Assume that the yen/dollar exchange rate quoted in Tokyo at 5p.m. is...
Question Completion Status: QUESTIONS Assume that the yen/dollar exchange rate quoted in Tokyo at 5p.m. is V120 - $1, and the New York yen/dollar exchange rate at the same time (noon New York time) is V123 - $1. What action should a broker take to yield immediate profit? forward exchange O currency speculation currency swap arbitrage QUESTION 10 In the article, "Stronger dollar weighs on profits," the authors note that U.S. multinational companies tend to suffer when the dollar strengthens...
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...
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...
QUESTION 8 A. Define Exchange rate and distinguish between direct and indirect quote. B. Johnson is...
QUESTION 8 A. Define Exchange rate and distinguish between direct and indirect quote. B. Johnson is a US citizen who recently got married to Bridget in New York. Johnson and Bridget plan to spend USD 1,000 each in Spain, New Zealand and Scotland as their honey moon package. At a Bank in New York they were offered the following bid-ask quote USD/EUR 1.304-1.305, USD/NZD 0.67-0.69 and USD/GBP 1.90-1.95. If Johnson and Bridget accept these quote how many EUR, NZD and...
The following are quotes from a currency dealer in the New York currency market: Spot exchange...
The following are quotes from a currency dealer in the New York
currency market:
Spot exchange rates and trades
1a. Which currency above has the widest bid ask spread?
Which has the narrowest?
b. Which currency above has the widest percentage bid ask
spread?
Which has the narrowest?
2. Using the quotes provided above, answer the following
question. (Phrase your explanation in parts b and d: as “If you
sell one (specify the currency) to the dealer, you will
receive...
QUESTION 11 Assume you are a French investor. You see that stock for British Airways has...
QUESTION 11 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 French exchange, a bid price of GBP30 and an ask price of GBP30.1 in Great Britain, and that the EUR/GBP bid-ask rates are 1.20-1.25. How much would you gain or lose by buying the stock in France and selling it in Great Britain? A gain of EUR1 A loss...
Use the following spot and forward bid-ask rates for the Japanese yen/U.S. dollar (¥/$) exchange rate...
Use the following spot and forward bid-ask rates for the Japanese yen/U.S. dollar (¥/$) exchange rate from September 16, 2010, to answer the following questions: a. What is the annual forward premium on the yen for all maturities? (Assume that the U.S. dollar is the home currency. Also use the Mid-Rate values computed in part a.) b. Which maturities have the smallest and largest forward premiums? Period ¥/$ Bid Rate ¥/$ Ask Rate spot 85.99 86.03 1 month 85.61 85.66...
QUESTION 14 You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is...
QUESTION 14 You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as $1.00 - €1.00 and the dollar-pound exchange rate is quoted at $1.80 - 21.00. If a bank quotes you a cross rate of £1.00 - €1.50, how much money can an astute trader make? No arbitrage is possible. $1,160,000 $200,000 $250,000 Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers Save and...
Questions 3. Exchange Rate Effects on Investing. Explain how the appreciation of the Australian dollar against...
Questions 3. Exchange Rate Effects on Investing. Explain how the appreciation of the Australian dollar against the U.S. dollar would affect the return to a U.S. firm that invested in an Australian money market security 4. Exchange Rate Effects on Borrowing. Explain how the appreciation of the Japanese yen against the U.S. dollar would affect the return to a U.S. firm that borrowed Japanese yen and used the proceeds for a U.S. project. 6. Bid/ask Spread. Utah Bank's s bid...
15 Suppose that the current exchange rate is €1.00 - $1.60. The indirect quote from the...
15 Suppose that the current exchange rate is €1.00 - $1.60. The indirect quote from the US. perspective is A) €0.6250 - $1.00 3) €1.50 - $1.00 €1.00 - $1.60 Dy none of the options 19) The bid price A) is the price that a dealer stands ready to pay B) is the price that a dealer stands ready to sell at. is the price that the dealer has just paid for something, his historical cost of the most recent...
Question Completion Status: QUESTIONS Assume that the yen/dollar exchange rate quoted in Tokyo at 5p.m. is V120 - $1, and the New York yen/dollar exchange rate at the same time (noon New York time) is V123 - $1. What action should a broker take to yield immediate profit? forward exchange O currency speculation currency swap arbitrage QUESTION 10 In the article, "Stronger dollar weighs on profits," the authors note that U.S. multinational companies tend to suffer when the dollar strengthens...
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...
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...
QUESTION 8 A. Define Exchange rate and distinguish between direct and indirect quote. B. Johnson is a US citizen who recently got married to Bridget in New York. Johnson and Bridget plan to spend USD 1,000 each in Spain, New Zealand and Scotland as their honey moon package. At a Bank in New York they were offered the following bid-ask quote USD/EUR 1.304-1.305, USD/NZD 0.67-0.69 and USD/GBP 1.90-1.95. If Johnson and Bridget accept these quote how many EUR, NZD and...
The following are quotes from a currency dealer in the New York
currency market:
Spot exchange rates and trades
1a. Which currency above has the widest bid ask spread?
Which has the narrowest?
b. Which currency above has the widest percentage bid ask
spread?
Which has the narrowest?
2. Using the quotes provided above, answer the following
question. (Phrase your explanation in parts b and d: as “If you
sell one (specify the currency) to the dealer, you will
receive...
QUESTION 11 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 French exchange, a bid price of GBP30 and an ask price of GBP30.1 in Great Britain, and that the EUR/GBP bid-ask rates are 1.20-1.25. How much would you gain or lose by buying the stock in France and selling it in Great Britain? A gain of EUR1 A loss...
QUESTION 14 You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as $1.00 - €1.00 and the dollar-pound exchange rate is quoted at $1.80 - 21.00. If a bank quotes you a cross rate of £1.00 - €1.50, how much money can an astute trader make? No arbitrage is possible. $1,160,000 $200,000 $250,000 Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers Save and...
Questions 3. Exchange Rate Effects on Investing. Explain how the appreciation of the Australian dollar against the U.S. dollar would affect the return to a U.S. firm that invested in an Australian money market security 4. Exchange Rate Effects on Borrowing. Explain how the appreciation of the Japanese yen against the U.S. dollar would affect the return to a U.S. firm that borrowed Japanese yen and used the proceeds for a U.S. project. 6. Bid/ask Spread. Utah Bank's s bid...
15 Suppose that the current exchange rate is €1.00 - $1.60. The indirect quote from the US. perspective is A) €0.6250 - $1.00 3) €1.50 - $1.00 €1.00 - $1.60 Dy none of the options 19) The bid price A) is the price that a dealer stands ready to pay B) is the price that a dealer stands ready to sell at. is the price that the dealer has just paid for something, his historical cost of the most recent...
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