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QUESTION 21 Assume that the yen/dollar exchange rate quoted in London at 3:00 p.m. is V115 $1. Rinaldo finds out that the rat
QUESTION 22 Assume you are an Israeli investor, the symbol for the Israeli currency, the shekel, is ILS. You see that stock f
QUESTION 23 The current spot rate is USD 1.00 / EUR and the 6-month forward is USD 1.20 /EUR. You go long you will purchase)
QUESTION 25 Suppose the exchange rate is: USD2GBP1. The direct quotation in Great Britain is: USD 2 - GBP 1 USD 0.50 = GBP 1
0 0
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Answer #1

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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