Cash outflow. 800 units×13000¥
=1,04,00,000¥
Outflow in USD
1¥=0.15 USD
So 1 USD= 1÷0.15¥
= 6.6667 ¥
Total outflow in USD= 1,04,00,000÷6.6667
= 15,59,992.20$
Question 6 (3 points) Suppose that a US-based company is buying Chinese goods. Current exchange rate...
Suppose that a US-based company is buying Chinese goods. Current exchange rate for Chinese Yuan is 0.15 USD. The price of goods is $13,000 per unit. The company is buying 800 units per year with a fixed contract for the next two years. Suppose that Chinese Yuan appreciate to 0.2 USD in the next year. The US importer will respond to this by lowering the demand to 600 units in the third year. What cash flow will be reflected on...
A US company X purchased goods from a Belgium based company worth 800 million Euro. Company X buys a ‘relevant’ option at 1 Euro = 1.33 USD in 2 months time. X pays an option premium of 0.001 USD per Euro. a) What relevant option X will purchase to hedge its currency b) What is the strike price? c) How much is the option premium paid for this contract? d) Under what circumstance would you exercise the option? e) What...
QUESTION 1: Suppose that the current spot exchange rate is GBP1= €1.50 and the one-year forward exchange rate is GBP1=€1.60. One-year interest rate is 5.4% in euros and 5.2% in pounds. If you have EUR1,000,000, what is the Covered Interest arbitrage profit in EUR? QUESTION 2: Suppose that the current spot exchange rate is GBP1= €1.50 and the one-year forward exchange rate is GBP1=€1.60. One-year interest rate is 5.4% in euros and 5.2% in pounds. If you conduct covered interest...
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Exercise 2.2 A Zorba Company, a US-based importer of specialty olive oil, placed olive oil at a price of 100 euro per case. The total purchase price is 30, Date Spot rate December 1, Year 1 $1 $1.08 December 31, Year 1 1.1 1.17 January 31, Year 2 1.15 1.15 Zorba Company has an incremental borrowing rate of 12 percent (1 per and prepares financial statements on December 31. The present value Tacto interest rate of...
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2 pts )\Question 29 Questions 23-36 are based on the following information: Transaction Exposure Problem: (34 points in total) Suppose that you (i.e., company XYZ) are a US-based importer of goods from Canada. You expect the value of the Canada to increase against the US dollar over the next 6 months. You will be making payment on a shipment of imported goods (CAD100,000)...
Suppose your company imports computer motherboards from Singapore. The exchange rate is currently 1.5134 S$/US$. You have just placed an order for 35,000 motherboards at a cost to you of 231.00 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $160 each. Calculate your profit if the exchange rates stay the same over the next 90 days. (Do not round intermediate calculations and round your answer to 2...
nework 3 Question 14 (of 15) value 6.66 points Suppose the spot exchange rate for the Hungarian forint is HUF204.70. The inflation rate in the United States is 1.9 percent per year and is 4.9 percent in Hungary. What do you predict the exchange rate will be in one year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Exchange rate HUF IS What do you predict the exchange rate will be in two...
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Suppose that on March 1 of the current year, the peso-US$
exchange rate was P5/$. On March 31 of the current year, the
exchange rate stood at P8/$. Calculate the 1-month percent change
in the value of the Mexican peso (= P).
Calculate the spot Korean won-Japanese yen exchange rate in W/¥.
(Korean won = W; Japanese yen = ¥)
Calculate the spot Taiwanese dollar-euro exchange rate in T$/€.
(Taiwanese dollar = T$;...
Suppose that you go on vacation to Canada every summer. Last year, the hotel room where you stayed cost C$100 per night, and it costs the same this year. The exchange rate was 1.04 USS/C$ last year, and it is 0.95 US$/C$ this year. This means you will pay than you paid last year. per night this year The U.S. dollar-Canadian dollar exchange rate is essentially the price of a Canadian dollar in terms of U.S. dollars. When this price...
Module 9 – Foreign Exchange Rate Risk Homework Exercise Part 1 1. Suppose that the EUR:USD is trading at 1.3342; the GBP:JPY is trading at 67.7600; and the EUR:GBP is trading at 0.8165. What should the USD:JPY rate be? 2. If a price index for US goods stands at 118.93 and the same price index for European goods (i.e., computed from the same consumption basket) stands at 183.34; what is the fair (under the theory of PPP) spot exchange rate...