Assume the following information: 1-year interest rate on U.S. dollars = 11.1% 1-year interest rate on...
Assume the following information:
1-year interest rate on U.S. dollars = 11.1%
1-year interest rate on Singapore dollars = 8.1%
Spot rate of Singapore dollar = 0.44 USD/SGD
If interest rate parity is in effect, what should be the 1 year
forward premium on the SGD?
Enter answer in percents.
Homework Answers
Request Answer!
We need at least 10 more requests to produce the answer.
0 / 10 have requested this problem solution
The more requests, the faster the answer.
Add Answer to:
Assume the following information:
1-year interest rate on U.S. dollars = 11.1%
1-year interest rate on...
Assume the following information: U.S. investors have $1,000,000 to invest: 12% 10% 1-year deposit rate offered...
Assume the following information: U.S. investors have $1,000,000 to invest: 12% 10% 1-year deposit rate offered on U.S. dollars 1-year deposit rate offered on Singapore dollars 1-year forward rate of Singapore dollars Spot rate of Singapore dollar $.412 $.400 Given this information: O interest rate parity exists and covered interest arbitrage by U.S. investors results in the same yield as investing domestically. O interest rate parity doesn't exist and covered interest arbitrage by U.S. investors results in a yield above...
Assume the following information: Swiss one-year interest rate = 8%, U.S. one-year interest rate ...
Assume the following information: Swiss one-year interest rate = 8%, U.S. one-year interest rate = 4%, Franc spot rate = 0.11 USD/CHF, Franc forward rate = 0.08 USD/CHF. If interest rate parity exists, how do you take advantage of this opportunity? Explain.
Assume the following information for a bank quoting on spot exchange rates: Exchange rate of Singapore...
Assume the following information for a bank quoting on spot exchange rates: Exchange rate of Singapore dollar in USD = 0.32 USD/SGD Exchange rate of pound in USD = 1.50 USD/GBP Exchange rate of pound in Singapore dollars = 4.50 SGD/GBP Based on the information given, as you and others perform triangular arbitrage, what should logically happen to the spot exchange rates? Choose all that apply. USD/SGD goes up USD/SGD goes down USD/GBP goes up USD/GBP goes down SGD/GBP goes...
d) Assume that interest rate parity exists. You expect that the one-year nominal interest rate in...
d) Assume that interest rate parity exists. You expect that the one-year nominal interest rate in the U.S. is 1.995%, while the one-year nominal interest rate in Australia is 3.695%. The spot rate of the Australian dollar is USD0.6939. You will need 15 million Australian Dollars in one year. Today, you purchase a one-year forward contract in Australian Dollars. Estimate how many U.S. Dollars (USD) will you need in one year to fulfill your forward contract.
Instructions: Show all calculations in detail. No partial credit will be given for just 1) Assume...
Instructions: Show all calculations in detail. No partial credit will be given for just 1) Assume the following information: U.S. deposit rate for 1 year U.S. borrowing rate for 1 year New Zealand deposit rate for 1 year - 8% New Zealand borrowing rate for 1 year 10% New Zealand dollar forward rate for 1 year $.40/NZS New Zealand dollar spot rate - $.39/NPS Also assume that a U.S. exporter denominates its New Zealand exports in NZS and expects to...
Singapore Airlines just signed a contract to buy 10 Boeing 787 to be delivered in 1...
Singapore Airlines just signed a contract to buy 10 Boeing 787 to be delivered in 1 year. The contract value is SGD 3.5 billion. The interest rates are the US is 5% and 4% in Singapore. The spot rate is 1.353 SGD per dollar. A. Show how Boeing can hedge within the money market? B. Find the no-arbitrage forward rate USD/SGD, and assume Boeing entered into a forward position. Would it go long or short? C. Suppose that there are...
Note: Use of approximation for interest rate parity is OK. Assume the four-year annualized interest rate...
Note: Use of approximation for interest rate parity is OK. Assume the four-year annualized interest rate in the US is 9 percent and the four-year annualized interest rate in Singapore is 6 percent. Assume interest rate parity holds for a four-year horizon. Assume the spot rate of the Singapore dollar is $.60. If the forward rate is used to forecast exchange rates, What will be the forecast for the Singapore dollar’s spot rate in four years? Does this forecast imply...
Assume that Co. will need to purchase 100,000 Singapore dollars (SGD) in 180 days. Today’s spot...
Assume that Co. will need to purchase 100,000 Singapore dollars (SGD) in 180 days. Today’s spot rate of the SGD is $.50, and the 180‑day forward rate is $.53. A call option on SGD exists, with an exercise price of $.52, a premium of $.02, and a 180‑day expiration date. A put option on SGD exists, with an exercise price of $.51, a premium of $.02, and a 180‑day expiration date. Company has developed the following probability distribution for the...
1. (5 points) Assume the following information for a bank quoting on spot exchange rates: Exchange...
1. (5 points) Assume the following information for a bank quoting on spot exchange rates: Exchange rate of pound in U.S. S Exchange rate of Singapore dollar in U.S. $ Exchange rate of pound in Singapore dollars $1.50 $.30 S$5.20 Given this information, if triangular arbitrage is possible, which of the following answer is the correct arbitrage strategy. a). Convert USD to Singapore dollar, then to British pound, and finally back to USD b). Convert USD to British pound, then...
Interest Rate Parity If your home country is the U.S. and based on the following information,...
Interest Rate Parity If your home country is the U.S. and based on the following information, should you invest in Mexico? Forward MXN/USD 0.0479 Time (months) 3 rh 2.00% 3.00% Spot MXN/USD 0.0478 rt Yes, because the rf is 3% which is higher than the 2% in the U.S. Yes, because your annual return would be 3.84% No, because you would lose 1.84% in annual returns No, because the implied rate is higher than the forward rate.
Assume the following information: U.S. investors have $1,000,000 to invest: 12% 10% 1-year deposit rate offered on U.S. dollars 1-year deposit rate offered on Singapore dollars 1-year forward rate of Singapore dollars Spot rate of Singapore dollar $.412 $.400 Given this information: O interest rate parity exists and covered interest arbitrage by U.S. investors results in the same yield as investing domestically. O interest rate parity doesn't exist and covered interest arbitrage by U.S. investors results in a yield above...
Instructions: Show all calculations in detail. No partial credit will be given for just 1) Assume the following information: U.S. deposit rate for 1 year U.S. borrowing rate for 1 year New Zealand deposit rate for 1 year - 8% New Zealand borrowing rate for 1 year 10% New Zealand dollar forward rate for 1 year $.40/NZS New Zealand dollar spot rate - $.39/NPS Also assume that a U.S. exporter denominates its New Zealand exports in NZS and expects to...
1. (5 points) Assume the following information for a bank quoting on spot exchange rates: Exchange rate of pound in U.S. S Exchange rate of Singapore dollar in U.S. $ Exchange rate of pound in Singapore dollars $1.50 $.30 S$5.20 Given this information, if triangular arbitrage is possible, which of the following answer is the correct arbitrage strategy. a). Convert USD to Singapore dollar, then to British pound, and finally back to USD b). Convert USD to British pound, then...
Interest Rate Parity If your home country is the U.S. and based on the following information, should you invest in Mexico? Forward MXN/USD 0.0479 Time (months) 3 rh 2.00% 3.00% Spot MXN/USD 0.0478 rt Yes, because the rf is 3% which is higher than the 2% in the U.S. Yes, because your annual return would be 3.84% No, because you would lose 1.84% in annual returns No, because the implied rate is higher than the forward rate.
Most questions answered within 3 hours.
-
Jason Allen is saving for an Australian vacation in three years.
He estimates that he will...
asked 16 minutes ago -
starting in the radial vein list in order all the vessels through
which an erythrocyte will...
asked 22 minutes ago -
Management at Work
As the training and development manager at the Litter*Bit*Better
Cat Litter Company, part...
asked 24 minutes ago -
What is the significance of the constraints in a physical model?
What part do distinct constraints...
asked 1 hour ago -
a student was diagnosed with myopia (nearshightedness). He can
comfortably read a newspaper when it is...
asked 1 hour ago -
Consider a 3m x 3m window in a house. The thermal conductivity
is reported to be...
asked 1 hour ago -
Why has California been the favorite destination of large number
of secondary migrants?
asked 2 hours ago -
Do not neglect the old for the new. The existing business must
not lose priority simply...
asked 5 hours ago -
Kylie is a single mom with two dependent children,
Tanner, age 7 and Olivia, age 11....
asked 6 hours ago -
Phosphorous + bromine = phosphorous tribromide. If 35.0 g of
bromine are reacted and 27.9 grams...
asked 8 hours ago -
Derive the long wavelength limit of the Planck energy density
distribution
asked 8 hours ago -
Calculate the pH of each of the following solutions.
0.50 M HBr
3.1×10−4 M KOH
4.2×10−5...
asked 11 hours ago