Assume the following information about the U.S. and New Zealand: U.S. N.Z. Inflation Rate 1.0% 3.0% Interest Rate 5.0% 8.0% NZ Spot NZ1 = $0.6204 According to the International Fisher Effect, what is the expected spot rate of the New Zealand dollar in one year? Round your answer to four decimals and no currency signs. Answer:
Assume the following information about the U.S. and New Zealand: U.S. N.Z. Inflation Rate 1.0% 3.0%...
4. The oneyear interest rate in New Zealand is 4 percent. The oneyear U.S. interest rate is 10 percent. The spot rate of the New Zealand dollar (NZ$) is $0.50. The forward rate of the New Zealand dollar is $0.54. a) Calculate the covered interest arbitrage profit if feasible for U.S. investors. Assume you start with $1,000,000. b) Calculate the covered interest arbitrage profit if feasible for New Zealand investors. Assume you start with NZ$1,000,000.
The one-year interest rate in New Zealand is 12 percent. The one-year U.S. interest rate is 17 percent. The spot rate of the New Zealand dollar (NZ$) is $0.4325. The forward rate of the New Zealand dollar is $0.4412. a. Is covered interest arbitrage feasible for U.S. investors? b. Is it feasible for New Zealand investors? Show all the necessary calculations. Assume that the U.S. investor can borrow $500,000 and the New Zealand investor can borrow NZ$900,000
1. Assume the following information: U.S. deposit rate for 1 year = 11% U.S. borrowing rate for 1 year = 12% 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 New Zealand dollar spot rate = $.39 Also assume that a U.S. exporter denominates its New Zealand exports in NZ$ and expects to receive NZ$600,000 in 90 days. You are a...
5. Covered Interest Arbitrage. The one-year interest rate in New Zealand is 6 percent. The one-year U.S. interest rate is 10 percent. The spot rate of the New Zealand dollar (NZ$) is $.50. The one-year forward rate of the New Zealand dollar is $.54. a) Is covered interest arbitrage feasible for U.S. investors? b) Is it feasible for New Zealand investors? In each case, explain why covered interest arbitrage is or is not feasible.
The spot rate between the U.S. dollar and the New Zealand dollar is $1 NZD1.3378. Assume the interest rate in the United States is 8 percent and in New Zealand is 4 percent. What should be the 3-month forward exchange rate? (Do not round intermediate calculations. Round your answer to 4 decimal places.) Forward exchange rate per NZD
2. Assume the following information: Value of Canadian dollar in U.S. dollars Value of New Zealand dollar in U.S. dollars Value of Canadian dollar in New Zealand dollars Quoted Price $0.93 $0.30 NZ$3.02 a) Calculate the profit from triangular arbitrage if you start with $1,000,000, show steps. b) Canadian dollar with respect to the U.S. dollar would rise, True or False? c) The value of the Canadian dollar with respect to the New Zealand dollar would decline, True or False?...
The spot rate between the U.S. dollar and the New Zealand dollar is $1 = NZD1.3362. Assume the interest rate in the United States is 8 percent and in New Zealand is 4 percent. What should be the 3-month forward exchange rate? (Do not round intermediate calculations. Round your answer to 4 decimal places.)
The spot rate between the U.S. dollar and the New Zealand dollar is $1 = NZD1.3352. Assume the interest rate in the United States is 4 percent and in New Zealand is 2 percent. What should be the 6-month forward exchange rate?
The spot rate between the U.S. dollar and the New Zealand dollar is $1 = NZD1.1867. Assume the interest rate in the United States is 5 percent and in New Zealand is 4 percent. What should be the 3-month forward exchange rate? (Do not round intermediate calculations. Round your answer to 4 decimal places.) Forward exchange rate per NZD
St. Paul Co. does business in the United States and New Zealand. In attempting to assess its economic exposure, it compiled the following information. a. St. Paul’s U.S. sales are somewhat affected by the value of the New Zealand dollar (NZ$), because it faces competition from New Zealand exporters. It forecasts the U.S. sales based on the following three exchange rate scenarios: 1) when exchange rate of NZ$=$0.40, revenue from US is $100 million, 2) exchange rate of NZ$=$0.50, revenue...