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.
Homework Answers
A MNC would have an account with a commercial bank . When its receives payment in Euros each month , it would deposit the check at a bank that provides foreign exchange services . Each month the bank would cash the check and then convert the EURO received into USD for the company at the prevailing sport rate .
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How can a MNC utilize the Spot Market Rate to facilitate the
exchange of currencies.
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
suppouse the spot market excange rate between two currencies is 1.250 to 1. if the 30-day...
suppouse the spot market excange rate between two currencies is 1.250 to 1. if the 30-day forward rate is 1.225 to 1 can you infer about the relative supply of each currency? explain?
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.
When using forward contracts, is the current spot rate between the two currencies relevant? Is the future, actual spot r...
When using forward contracts, is the current spot rate between the two currencies relevant? Is the future, actual spot rate (when the forward contract matures) between the two currencies relevant?
Currency appreciation: Comparing a current spot rate to a past spot rate between two currencies, the...
Currency appreciation: Comparing a current spot rate to a past spot rate between two currencies, the currency that is appreciating is gaining in strength vis-à-vis another currency. Conversely, a currency that is depreciating is weakening vis-à-vis the other currency. Question: Choose a major currency pair. Compare the spot rate quote of this pair on November 5 2019 to its past spot rate quote (choose the time). Which of the currency in your pair appreciated (strengthened) or depreciated (weakened). Answer: Major...
Assume that the spot exchange rate of the British pound is $1.73/£. How will this spot...
Assume that the spot exchange rate of the British pound is $1.73/£. How will this spot rate adjust according to PPP if the United Kingdom experiences an inflation rate of 7 percent while the United States experiences an inflation rate of 2 percent?
2. Synthetic Forward a) Explain how deposits and spot transactions in the foreign exchange rate can...
2. Synthetic Forward a) Explain how deposits and spot transactions in the foreign exchange rate can be used to create the same payoff as a forward contract. Illustrate with an example. b) Assume the US interest rate on a 1 year deposit is 1% and the Japanese rate on an identical deposit is / and the spot rate is 100 yen/US$. Compute the forward rate and the forward premium. Show calculations
Assuming that exchange rates are consistent across currencies, then if the Canadian dollar exchange rate with...
Assuming that exchange rates are consistent across currencies, then if the Canadian dollar exchange rate with the US dollar and the US dollar exchange rate with the Euro are both equal to 1.18, then the Canadian dollar exchange rate with the Euro is equal to 1.00.
What is the difference between the Spot Exchange Market and the Forward Exchange Market? Who are...
What is the difference between the Spot Exchange Market and the Forward Exchange Market? Who are the participants in the Forward Exchange Market and for what reason/purpose does each of these parties participate in the Forward Exchange Market?
What is the difference between the Spot Exchange Market and the Forward Exchange Market? Who are...
What is the difference between the Spot Exchange Market and the Forward Exchange Market? Who are the participants in the Forward Exchange Market and for what reason/purpose does each of these parties engage in the Forward Exchange Market?
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
2. Synthetic Forward a) Explain how deposits and spot transactions in the foreign exchange rate can be used to create the same payoff as a forward contract. Illustrate with an example. b) Assume the US interest rate on a 1 year deposit is 1% and the Japanese rate on an identical deposit is / and the spot rate is 100 yen/US$. Compute the forward rate and the forward premium. Show calculations
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