The current U.S. dollar-yen spot rate is 125.00\%/\$ . If the 90-day forward exchange rate is 127.60\%/\$ then the yen i...
Homework Answers
The formula to calculate forward premium is given below:
Substitute 127.60 for forward rate, 125 for spot rate, 90 for number of days,
Hence, the yen is selling at 8.15% discount per annum.
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The current U.S. dollar-yen spot rate is 125.00\%/\$ . If the 90-day forward exchange rate is 127.60\%/\$ then the yen i...
current spot exchange rate: $0.0100/yen current 180-day forward exchange rate: $0.0105/yen 180-day U.S. interest rate(on dollar...
current spot exchange rate: $0.0100/yen current 180-day forward exchange rate: $0.0105/yen 180-day U.S. interest rate(on dollar denominated assets): 6.05% 180-day Japanese interest rate(on yen denominated assets): 1.00%
QUESTION 25 Let the U.S. dollar-yen spot rate be ¥120/$. Also, let the 180-day forward exchange...
QUESTION 25 Let the U.S. dollar-yen spot rate be ¥120/$. Also, let the 180-day forward exchange rate be ¥124.8/$. Then the yen is selling at a per annum _________ of ___________. a. premium; 8.00% b. premium; 6.30% c. discount; 8.00% d. discount; 1.57% QUESTION 26 Assume that a green card holder flies with American Airlines from NYC to Paris. The related transactions will be reported on the Balance of Payments. True False
Use the following spot and forward bid-ask rates for the Japanese yen/U.S. dollar (¥/$) exchange rate...
Use the following spot and forward bid-ask rates for the Japanese yen/U.S. dollar (¥/$) exchange rate from September 16, 2010, to answer the following questions: a. What is the annual forward premium on the yen for all maturities? (Assume that the U.S. dollar is the home currency. Also use the Mid-Rate values computed in part a.) b. Which maturities have the smallest and largest forward premiums? Period ¥/$ Bid Rate ¥/$ Ask Rate spot 85.99 86.03 1 month 85.61 85.66...
The annualized forward when the Japanese yen/U.S. dollar exchange rates are JPY118.25 per USD spot and...
The annualized forward when the Japanese yen/U.S. dollar exchange rates are JPY118.25 per USD spot and JPY116.85 per USD quoted on a one month forward contract is discount; 10.44% O premium: 7.28% discount: 14.21% O premium; 12.41%.
Table 11.4. Forward Exchange Rates Switzerland (Franc) 30-day Forward 90-day Forward 180-day Forward U.S. Dollar Equivalent...
Table 11.4. Forward Exchange Rates Switzerland (Franc) 30-day Forward 90-day Forward 180-day Forward U.S. Dollar Equivalent Wednesday Tuesday .6598 .6590 .6592 .6585 .6585 .6578 .6577 .6572 10. Consider Table 11.4. If one were to buy francs for immediate delivery, on Tuesday the dollar cost of each franc would be: a. $0.6598 b. $1.5156 c. $0.6590 d. $1.5175 11. Consider Table 11.4. If one were to buy dollars for immediate delivery, on Tuesday the franc cost of each dollar would be:...
The following exchange rates exist on a particular day. Spot exchange rate: U.S. $1.400/euro Forward exchange...
The following exchange rates exist on a particular day. Spot exchange rate: U.S. $1.400/euro Forward exchange rate (90 days): U.S. $1.427/euro The following (annualized) interest rates on 90-day government bonds also exist on this day: Euro-denominated bonds: 8% U.S. dollar–denominated bonds: 16% Financial investors in all countries have the expectation that the spot exchange rate in 90 days will be 0.7100 euro/U.S. dollar. Are investors expecting the euro will appreciate or depreciate during the next 90 days? Consider the comparison...
Suppose that the current spot exchange rate is 0.80/$ and the three-month forward exchange rate i...
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...
Assume the following information: Spot rate of Canadian dollar : $.80 90-day forward rate of Canadian...
Assume the following information: Spot rate of Canadian dollar : $.80 90-day forward rate of Canadian dollar : $.79 90-day Canadian interest rate : 4% 90-day U.S. interest rate : 2.5% a) What would be the return to a U.S. investor who used covered interest arbitrage from investing in Canada? (assume the investor invests $1,000,000). Does the return exceed the return from investing in the U.S. over the 90-day period? Is it worthwhile for the U.S. investor to invest in...
1. Assume the following information: Spot rate of Canadian dollar : $.80 90-day forward rate of Canadian dollar : $.79 9...
1. Assume the following information: Spot rate of Canadian dollar : $.80 90-day forward rate of Canadian dollar : $.79 90-day Canadian interest rate : 4% 90-day U.S. interest rate : 2.5% a) What would be the return to a U.S. investor who used covered interest arbitrage from investing in Canada? (assume the investor invests $1,000,000). Does the return exceed the return from investing in the U.S. over the 90-day period? Is it worthwhile for the U.S. investor to invest...
CH:17: 3. Trading in foreign exchange A: What are spot rates and forward rates? Lost Pigeon...
CH:17: 3. Trading in foreign exchange A: What are spot rates and forward rates? Lost Pigeon Aviation, a U.S. company, produces and exports industrial machinery overseas. It recently made a sale to a Japanese manufacturing firm for ¥625 million, but the Japanese firm has 60 days before it must make the payment to Lost Pigeon Aviation The spot exchange rate is ¥130.11 per dollar, and the 60-day forward rate is ¥133.78 per dollar. Is the yen selling at a premium...
current spot exchange rate: $0.0100/yen current 180-day forward exchange rate: $0.0105/yen 180-day U.S. interest rate(on dollar denominated assets): 6.05% 180-day Japanese interest rate(on yen denominated assets): 1.00%
The annualized forward when the Japanese yen/U.S. dollar exchange rates are JPY118.25 per USD spot and JPY116.85 per USD quoted on a one month forward contract is discount; 10.44% O premium: 7.28% discount: 14.21% O premium; 12.41%.
Table 11.4. Forward Exchange Rates Switzerland (Franc) 30-day Forward 90-day Forward 180-day Forward U.S. Dollar Equivalent Wednesday Tuesday .6598 .6590 .6592 .6585 .6585 .6578 .6577 .6572 10. Consider Table 11.4. If one were to buy francs for immediate delivery, on Tuesday the dollar cost of each franc would be: a. $0.6598 b. $1.5156 c. $0.6590 d. $1.5175 11. Consider Table 11.4. If one were to buy dollars for immediate delivery, on Tuesday the franc cost of each dollar would be:...
Suppose that the current spot exchange rate is 0.80/$ 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...
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