Homework Answers
Answer is 1.12 USD.
Since US dollarbwas traded at 0.89 USD, thus 1 Euro= 1/0.89USD= 1.12USD.
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On the 20/06/2020, one USD was traded on the foreign exchange market for about 0.89 USD....
The table below shows the nominal exchange rates (as of 25 February 2020) between the Swedish...
The table below shows the nominal exchange rates (as of 25 February 2020) between the Swedish krona (SEK) and the US dollar (USD) and the British pound (GBP), respectively. Foreign currency USD GBP SEK per foreign currency 10.45 13.46 a) Express the nominal exchange rates for SEK as foreign currency per SEK? (2p) b) What is the nominal exchange rate between USD and GBP, expressed as USD per GBP? (2p) c) Suppose that a representative basket of goods and services...
Suppose your broker give you the following information: Spot exchange rate (USD/EUR) = 1.1370 One year...
Suppose your broker give you the following information: Spot exchange rate (USD/EUR) = 1.1370 One year forward rate (USD/EUR) = 1.1405 One year USD interest rate = 0.87% One year Euro interest rate = 0.65% a. Is there any violation of interest rate parity? b. How would you take advantage of any arbitrage situation? c. What is your profit? d. Suggest an equilibrium value for the forward rate
. Consider a foreign economy with current exchange rate of 100 units of currency per 1 USD. Inves...
investors can buy a US paying 3
urgent please answer
. Consider a foreign economy with current exchange rate of 100 units of currency per 1 USD. Investors can buy a US bond paying 3% for a year or can by a foreign bond (with equivalent risk) paying 5% for a year. a. What exchange rate in a year's time would make investors indifferent between investing in the US or foreign country? b. Suddenly there is news that the foreign...
Consider a foreign economy with current exchange rate of 15 units of currency per 1 USD. Investors can buy a US bond paying 396 for a year or can by a foreign bond (with equivalent risk). a. If excha...
Consider a foreign economy with current exchange rate of 15 units of currency per 1 USD. Investors can buy a US bond paying 396 for a year or can by a foreign bond (with equivalent risk). a. If exchange rate one year forward is 16, what interest rate would make investors indifferent between investing in the US or foreign country? b. If forward exchange rate were 14, instead, what interest rate would make investors indifferent? 4.
Consider a foreign economy...
Agnetha Poulsen works as an analyst in the foreign exchange overlay strategies department for CFN, a...
Agnetha Poulsen works as an analyst in the foreign exchange overlay strategies department for CFN, a large asset management firm serving institutional clients. She is concerned about the excessive unhedged currency exposure taken on by the overlay strategies department. She makes an appointment with Alvilda Kristensen, director of risk management, to discuss this matter. Prior to the meeting, Poulsen collects information on foreign currency quotes and on interest rates as shown in Exhibits 1 and 2. https://d.pr/i/Adur6t Exhibit 1: Current...
13) The foreign exchange market closes A) 4:00 p.m. (Tokyo time). B) during the Twilight Hour....
13) The foreign exchange market closes A) 4:00 p.m. (Tokyo time). B) during the Twilight Hour. C) 4:00 p.m. EST (New York time). D) never. 14) Nonfinancial companies in Mexico and Brazil lost massive amounts of money in 2008 when they speculated that the USD would continue to _ in value vis-a-vis their home currencies. A) increase B) decrease C) decrease and then increase D) stay the same
Suppose you are a speculator who trades in the foreign exchange market. You take a short...
Suppose you are a speculator who trades in the foreign exchange market. You take a short position in the AUDNZD at 1.0779. After two weeks have gone by, the AUDUSD is trading at 0.71860 and the NZDUSD is trading at 0.6825. If the lending/borrowing rate is 0% and you traded 1,000,000 AUD, what are your MTM profits in NZD? If the answer is A,B, C, D, E, or F, simply type the respective letter in the answer box. If the...
14 Suppose you are a speculator who trades in the foreign exchange market. You take a...
14 Suppose you are a speculator who trades in the foreign exchange market. You take a short position in the AUDNZD at 1.0779. After two weeks have gone by, the AUDUSD is trading at 0.71860 and the NZDUSD is trading at 0.6825. If the lending/borrowing rate is 0% and you traded 1,000,000 AUD, what are your MTM profits in NZD? If the answer is A,B, C, D, E, or F, simply type the respective letter in the answer box. If...
Suppose you are a speculator who trades in the foreign exchange market. You take a short...
Suppose you are a speculator who trades in the foreign exchange market. You take a short position in the AUDNZD at 1.0779. After two weeks have gone by, the AUDUSD is trading at 0.71860 and the NZDUSD is trading at 0.6825. If the lending/borrowing rate is 0% and you traded 1,250,000 AUD, what are your MTM profits in NZD? If the answer is A, B, C, D, E, or F, simply type the respective letter in the answer box. If...
QUESTION 1: Suppose that the current spot exchange rate is GBP1= €1.50 and the one-year forward...
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...
The table below shows the nominal exchange rates (as of 25 February 2020) between the Swedish krona (SEK) and the US dollar (USD) and the British pound (GBP), respectively. Foreign currency USD GBP SEK per foreign currency 10.45 13.46 a) Express the nominal exchange rates for SEK as foreign currency per SEK? (2p) b) What is the nominal exchange rate between USD and GBP, expressed as USD per GBP? (2p) c) Suppose that a representative basket of goods and services...
investors can buy a US paying 3
urgent please answer
. Consider a foreign economy with current exchange rate of 100 units of currency per 1 USD. Investors can buy a US bond paying 3% for a year or can by a foreign bond (with equivalent risk) paying 5% for a year. a. What exchange rate in a year's time would make investors indifferent between investing in the US or foreign country? b. Suddenly there is news that the foreign...
Consider a foreign economy with current exchange rate of 15 units of currency per 1 USD. Investors can buy a US bond paying 396 for a year or can by a foreign bond (with equivalent risk). a. If exchange rate one year forward is 16, what interest rate would make investors indifferent between investing in the US or foreign country? b. If forward exchange rate were 14, instead, what interest rate would make investors indifferent? 4.
Consider a foreign economy...
13) The foreign exchange market closes A) 4:00 p.m. (Tokyo time). B) during the Twilight Hour. C) 4:00 p.m. EST (New York time). D) never. 14) Nonfinancial companies in Mexico and Brazil lost massive amounts of money in 2008 when they speculated that the USD would continue to _ in value vis-a-vis their home currencies. A) increase B) decrease C) decrease and then increase D) stay the same
14 Suppose you are a speculator who trades in the foreign exchange market. You take a short position in the AUDNZD at 1.0779. After two weeks have gone by, the AUDUSD is trading at 0.71860 and the NZDUSD is trading at 0.6825. If the lending/borrowing rate is 0% and you traded 1,000,000 AUD, what are your MTM profits in NZD? If the answer is A,B, C, D, E, or F, simply type the respective letter in the answer box. If...
Suppose you are a speculator who trades in the foreign exchange market. You take a short position in the AUDNZD at 1.0779. After two weeks have gone by, the AUDUSD is trading at 0.71860 and the NZDUSD is trading at 0.6825. If the lending/borrowing rate is 0% and you traded 1,250,000 AUD, what are your MTM profits in NZD? If the answer is A, B, C, D, E, or F, simply type the respective letter in the answer box. If...
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