Question
In: Finance
. Assume the following information: Current spot rate of Australian dollar = $.67 Forecasted spot rate...
. Assume the following information:
|
Current spot rate of Australian dollar |
= |
$.67 |
|
Forecasted spot rate of Australian dollar 1 year from now |
= |
$.68 |
|
1-year forward rate of Australian dollar |
= |
$.93 |
|
Annual interest rate for Australian dollar deposit |
= |
4% |
|
Annual interest rate in the U.S. |
= |
2% |
What is your percentage return from covered interest arbitrage with $550,000 for one year?
Solutions
Expert Solution
JUST CHECK FORWARD RATE, IT IS TOO HIGH IN COMPARISON TO SPOT RATE. I HAVE SOLVED SUM WITH GIVEN DATA
jeff jeffy answered 2 weeks agoRelated Solutions
3. Assume the following information: Current spot rate of Australian dollar = $.86 Forecasted spot rate...
3. Assume the following information: Current spot rate of
Australian dollar = $.86 Forecasted spot rate of Australian dollar
1 year from now = $.88 1-year forward rate of Australian dollar =
$.93 Annual interest rate for Australian dollar deposit = 4% Annual
interest rate in the U.S. = 2% What is your percentage return from
covered interest arbitrage with $650,000?
Assume the following information Current spot rate of New Zealand dollar = $0.41 Forecasted spot rate...
Assume the following information
Current spot rate of New Zealand dollar
=
$0.41
Forecasted spot rate of New Zealand dollar 1 year from now
=
$0.43
One-year forward rate of the New Zealand dollar
=
$0.44
Annual interest rate on New Zealand dollars
=
8%
Annual interest rate on U.S. dollars
=
9%
Given the information in this question, the return from covered
interest arbitrage by U.S. investors with $675,000 to invest is
about _______in decimal.
Assume the following information Current spot rate of New Zealand dollar = $0.41 Forecasted spot rate...
Assume the following information
Current spot rate of New Zealand dollar
=
$0.41
Forecasted spot rate of New Zealand dollar 1 year from now
=
$0.43
One-year forward rate of the New Zealand dollar
=
$0.42
Annual interest rate on New Zealand dollars
=
0.075
Annual interest rate on U.S. dollars
=
.09
Given the information in this question, the return from covered
interest arbitrage by U.S. investors with $479,000 to invest is
about ________.
Assume the current U.S. dollar-British spot rate is $1.3063=£. If the current nominal one-year interest rate...
Assume the current U.S. dollar-British spot rate is $1.3063=£.
If the current nominal one-year interest rate in the U.S. is 1.5%
and the comparable rate in Britain is 0.75%, what is the
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8.5.1
Assume that the current spot rate for the Canadian dollar is 0.71 USD per C$. How...
Assume that the current spot rate for the Canadian dollar is
0.71 USD per C$. How will the Canadian dollar (C$) spot rate adjust
over the next year according to Purchasing Power Parity (PPP),
given the following information. That is, according to PPP, what is
the expected appreciation/depreciation in the Canadian dollar over
the next year AND what is the expected future spot
rate of the Canadian dollar one year from now? Use the information
in the table below to...
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assume the Canadian dollar spot rate is 1.18c$/us$, the swiss
spot rate is 1.29CHF/us$ and the market cross rate is 1.11 chf/c$
a. calculate the implied cross-rate of CHF/c$ b calculate the
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Use the following information on the U.S. dollar value of the euro. Spot Rate Forward Rate...
Use the following information on the U.S. dollar value of the
euro.
Spot Rate
Forward Rate for
April 30, 2021 Delivery
October 30, 2020
$ 1.230
$ 1.240
November 1, 2020
1.248
1.245
December 31, 2020
1.260
1.265
April 30, 2021
1.270
1.270
On October 30, 2020, a U.S. company receives a purchase order from
a customer in Spain. Under the sale terms, the customer will pay
the company €100,000 on April 30. On October 30, the U.S. company
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Part III: Interest Rate Parity and Covered Interest Arbitrage Assume the following information: Current spot rate...
Part III: Interest Rate Parity and Covered Interest
Arbitrage
Assume the following information:
Current spot rate of Australian
dollar
=
$.65
Forecasted spot rate of Australian dollar 1 year from now
=
$.69
1-year forward rate of Australian dollar
=
$.68
Annual interest rate for Australian dollar deposit
=
5%
Annual interest rate in the United States
=
8%
According to Interest Rate Parity, is the covered interest
arbitrage feasible to U.S. investors and Australian investors?
Please explain your answers...
You expect that the Mexican peso will appreciate against the Australian dollar from its spot rate...
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exist:
Lending Rate
Borrowing Rate
Australian dollar 7.92% 8.96%
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You have a borrowing capacity of either 3 million Australian
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(enter 2 decimal places...
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Suppose that the current spot exchange rate between the US
dollar and NZ dollar is $.70/NZ$ and the 1-year forward rate is
$.695. The one year interest rates are 1% for the USD and 3% for
the NZ$. What is the payoff if a US MNC conducts covered interest
arbitrage, for a $1,000,000 starting amount?
1,022,643
$1,010,000
$985,857
$1,000,540
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