Suppose the current exchange rate between the United States and Switzerland is $1.02/Fr. The continuously compounded interest rate in the U.S. is 6%, while the continuously compounded Swiss franc-denominated interest rate is 9%. What is the price of a 5 -month prepaid forward contract on the Swiss franc?
I need the step by step for the prepaid forward, option e.
a.$1.0328/Fr b.$0.9700/Fr c.$1.0073/Fr d.$1.0590/Fr e.$0.9825/Fr
Suppose the current exchange rate between the United States and Switzerland is $1.02/Fr. The continuously compounded...
On June 1, the 4-month interest rates in Switzerland and the United States were, respectively, 2% and 5% per annum with discrete compounding. The spot price of the Swiss franc was $0.8000/CHF. You took a short position of a CHF forward, CHF 100,000, delivery on October 1. One month later on July 1, three-month interest rates in Switzerland and the United States were, respectively, 2.5% and 4.5% per annum with discrete compounding. The spot exchange rate on the Swiss franc...
Considering the following, the US continuously compounded risk free rate is 5% and Swiss risk free rate is 3%, and the currency spot exchange rate is $0.89 USD per CHF (Swiss Franc). A. Using the Currency continuous pricing model, what is the appropriate “Interest Rate Parity” forward price on a contract expiring in 3 months? B. For a 3-month forward contract, if a dealer quotes a forward price on USD per CHF as $0.90 per CHF, then answer the following...
1a) The current price of a stock is $43, and the continuously compounded risk-free rate is 7.5%. The stock pays a continuous dividend yield of 1%. A European call option with a exercise price of $35 and 9 months until expiration has a current value of $11.08. What is the value of a European put option written on the stock with the same exercise price and expiration date as the call? Answers: a. $5.17 b. $3.08 c. $1.49 d. $2.50...
You visited Switzerland over summer and brought back 130.86 swiss francs to the United States. How many U.S. dollars will you get, if you exchange your swiss francs for U.S. dollars? The exchange rate is 1 U.S dollar = 0.867 swiss francs. Hint: You are converting swiss franc into USD. Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35...
Challenge Problem. Following are currency exchange “crossrates” between pairs of major currencies. Currency crossrates include both direct and indirect methods for expressing relative exchange rates. Currency crossrates include both direct and indirect methods for expressing relative exchange rates. U.S. U.K. Swiss Japanese European Dollar Pound Franc Yen Euro EMU 1.1406 ? 0.6783 0.0087 --- Japan 130.66 185.98 77.705 --- 114.60 Switzerland 1.6817 2.3936 --- 0.0129 ? United Kingdom ? --- 0.4178 ? 0.6162 United States --- 1.4231 ? 0.0077 0.8767 a. Fill in the missing exchange rates in the crossrates table. b. If the inflation rate is expected to be 3 percent in the European Monetary Union (EMU) and 4 percent in...
11. The interest rate on one-year risk-free bonds is 4.25 percent in the United States and 3.75 percent in Switzerland. The current exchange rate is $0.65 per Swiss frand. Suppose that you are a U.S, investor and you expect the Swiss franc to appreciate 2.75 percent over the next year. a. Calculate the foreign currency risk premium. b. Calculate the domestic currency return on the foreign bond, assuming that your cur- rency appreciation expectations are met
If the spot RMB exchange rate is 6.7, the U.S. continuously compounded interest rate is 2%, and the Chinese continuously compounded interest rate is 3%, what is the one year forward exchange rate? Use continous compounding?
Suppose that you are an investor based in Switzerland, and you expect the U.S. dollar to depreciate by 2.75 percent over the next year. The interest rate on one-year risk-free bonds is 5.25 percent in the United States and 2.75 percent in Switzerland. The current exchange rate is SFr1.62 per U.S. dollar. te the foreign currency risk premium from the Swiss investor's viewpoint. that the Swiss investor's expectations are met. b. Calculate the return on the U.S bond from the...
Suppose that the current spot exchange rate is 0.80/$ and the three-month forward exchange rate is 0.7813/$. The three-month interest rate is 5.60 percent per annum in the United States and 5.40 percent per annum in France. Assume that you can borrow up to $1,000,000 or 800,000. assuming that you want to realize profit in terms of U.S. dollars. The size of your arbitrage profit is S rounded) Suppose that the current spot exchange rate is 0.80/$ and the three-month...
Suppose the current stock price is $45.34 and the continuously compounded intrest rate is 5% The stock pays a dividend of $1.20 in three months. You observe a 9-month forward contract with forward price $47.56. Is there an arbitrage opportunity on the forward contract? If so describe the strategy to realize a profit and find the arbitrage profit. Answer: $1.7178 W1