Question
In: Finance
Use the data below to answer the three questions that follow it. $/£ (USD/GBP) - Sport...
Use the data below to answer the three questions that follow it. $/£ (USD/GBP) - Sport Rate is 1.2360 $/£ (USD/GBP) - 180-day forward rate is 1.2300 $ interest rates are 0.25% (one quarter of a percent or 25 basis points) £ (GBP) interest rates are 1.00%
If you could borrow either £ 10,000,000 or $ 10,000,000 how much profit could you make from a covered interest arbitrage? Be sure to state your answer in terms of USD or GPB.
Solutions
Expert Solution
As per Interest rate parity:
As per Interest rate parity the difference in spot fate and forward rate exits due to differences in interest rate between two countries.
F/S = (1+ra)/(1+rb)
F= forward rate
S = spot rate.
ra = interest rate of price currency.
rb= interest rate of base currency.
If the above equation does not hold good then there is a chance of Arbitrage.
Answer: 25,970.87 (rounding off errors from your answer).
ANSWER IN THE IMAGE. FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.
jeff jeffy answered 2 years agoRelated Solutions
3) Use the data below to answer the questions that follow X 7 9 11 15...
3) Use the data below to answer the questions that follow
X 7 9 11 15 15 17 21 21 21 29 33 34 35 35
Y 22 20 17 17 16 12 10 10 7 4 4
3 1 0
a) Calculate the correlation coefficient “r”
b) Explain what your value for r means for this data
c) Determine the equation for the linear regression line of this
data
d) What does your equation predict for...
Consider the following data:- GBP/USD spot : 1.7500/10 GBP/USD 3m fwd : 1.7380/1.7400 3months dollar interest...
Consider the following data:-
GBP/USD spot : 1.7500/10
GBP/USD 3m fwd : 1.7380/1.7400
3months dollar interest rate = 8.1%
3 months pound sterling interest rate = 11%
A British firm has a 3 month dollar receivable of USD
500,000. The 2 options available to the firm are:-
Cover the receivable in the forward market
Borrow in dollars today and convert it to pounds in the
spot market. Invest the pounds in the local market for 3 months.
The receivables in...
Use the following data to answer the questions below:
Use the following data to answer the
questions below: Q
VC
MC
AVC
1
$10
___
___
2
16
___
___
3
20
___
___
4
25
___
___
5
31
___
___
6
38
___
___
7
46
___
___8
55
___
___9
65
___
___ a. Calculate the marginal cost and
average variable cost for each level of production.b. How much would the firm produce if
it could sell its product for...
Look at the Data Below then answer/calculate the totals in the questions that follow. (Show Workings)...
Look at the Data Below then answer/calculate the totals in the
questions that follow. (Show Workings)
Entrepreneur's potential earnings as a salaried worker =
$50,000
Annual lease on building = $22,000
Annual revenue from operations = $380,000
Payments to workers = $120,000
Utilities (electricity, water, disposal) costs = $8,000
Entrepreneur's potential economic profit from the next best
entrepreneurial activity = $80,000
Entrepreneur's forgone interest on personal funds used to
finance the business = $6,000
Answer these questions directly:
a) Creamy...
refer to the table of data below and answer the questions that follow economic state probability...
refer to the table of data below and answer the questions that
follow
economic state probability of economic state return on stock J
return on stock K
bear 0.25 -0.02 0.034
normal 0.60 0.138 0.062
bull 0.15 0.218 0.092
calculate the expected return of each stock
if a portfolio was created with from 30% of stock j and 70% of
stock k what is the expected return of the portfolio?
calculate the standard deviation of each stock?
calculate the covariance...
Use the option quote information shown below to answer the questions that follow. The stock is...
Use the option quote
information shown below to answer the questions that follow. The
stock is currently selling for $30.
Option and
Calls
Puts
NY Close
Expiration
Strike Price
Vol.
Last
Vol.
Last
Macrosoft
February
31
88
.53
43
1.53
March
31
64
.77
25
1.94
May
31
25
1.05
14
2.36
August
31
6
1.26
6
2.40
a. Suppose you buy 13 contracts of the February 31
call option. How much will you pay, ignoring commissions?
(Do not round...
Use the option quote information shown below to answer the questions that follow. The stock is...
Use the option quote
information shown below to answer the questions that follow. The
stock is currently selling for $45.
Option and
Calls
Puts
NY Close
Expiration
Strike Price
Vol.
Last
Vol.
Last
Macrosoft
February
47
103
2.03
58
3.03
March
47
79
2.27
40
3.44
May
47
40
2.55
29
3.86
August
47
21
2.76
21
3.90
Suppose you buy 28 contracts of the February 47 call option and
Macrosoft stock is selling for $48 per share on the...
Use the scenario below to frame your answer of the questions that follow As you join...
Use the scenario below to frame your answer of the questions
that follow
As you join some friends for coffee, they are discussing a group
of classmates who seem to have problems with their identity
development—some seem to have a rather incoherent, disjointed,
incomplete sense of who they are; one seems to have made no
exploration at all in any areas of his development and just does
what his parents tell him, which he says is fine with him; and...
Use the option quote information shown below to answer the questions that follow. The stock is...
Use the option quote information shown below to answer the
questions that follow. The stock is currently selling for
$36.
Option and
Calls
Puts
NY Close
Expiration
Strike Price
Vol.
Last
Vol.
Last
Macrosoft
February
37
94
1.13
49
2.13
March
37
70
1.37
31
2.54
May
37
31
1.65
20
2.96
August
37
12
1.86
12
3.00
a. Suppose you buy 19 contracts of the February 37
call option. How much will you pay, ignoring commissions?
(Do not round...
Please answer all the questions. Thank you Use the following data to answer the questions below:...
Please answer all the questions. Thank you
Use the following data to answer the questions below:
Column 1
Column 2
Column 3
Y in $
C in $
0
500
500
850
1,000
1,200
1,500
1,550
2,000
1,900
2,500
2,250
3,000
2,600
What is mpc and mps? Compute mpc and mps.
Assume investment equals $ 100, government spending equals $
75, exports equal $ 50 and imports equal $ 35. Compute the
aggregate expenditure in column 3.
Draw a graph...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Step 1 Picture yourself as a Senior Product Manager in your favorite industry. This could be...
- Gauss Jordan elimination using python for a 2d list (3x3) without using any library. Thanks
- What are some of the greatest barriers preventing our schools from meeting the educational goals for...
- What aspect of the materials used in nanotechnology differentiates it from the nanoscale devices that the...
- Postfix Arithmetic Operation (C++) Friday, 27 September 2019, 04:21 PM Use stack to implement postfix arithmetic...
- * What is the link between SOX compliance and law and information systems security? ** Why...
- A chemist has a substance which was either phenol or resorcinol. He puts the substance in...
ADVERTISEMENT