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 $1.3063=£.
If the current nominal one-year interest rate in the U.S. is 1.5%
and the comparable rate in Britain is 0.75%, what is the
approximate forward exchange rate for 90 days?
0.58£/C$ is the real Canadian dollar-British spot rate.
If Canada 's actual nominal one-year interest rate is 2% and
Britain's equivalent rate is 3%, then what's the estimated 90-day
forward exchange rate?
Assume the spot rate of the ? is $1.7000. The British interest
rate is 10%, and the U.S. interest rate is 11% over the 360?day (1
year) period. The British inflation rate is 4% and the U.S.
inflation rate is 3.5% over the 360-day (1 year) period. The
180-day forward price is $1.7200/?. The 180-day European call
option on the $ with the exercise price of ?0.5800 is selling at 3%
premium, while the 180-day European put option on the...
Assume the current spot rate is CAD1.3250 and the 1-year forward
rate is CAD1.3220. The nominal risk-free rate in Canada is 2.25
percent while it is 2.1 percent in the U.S. Using covered interest
arbitrage you can earn an extra _____ profit over that which you
would earn if you invested $1 in the U.S. for one year.
The spot exchange rate for the British pound is $1.2576. The
U.S. interest rate is 0.25 percent, and the British interest rate
is 0.50 percent. A futures contract on the exchange rate for the
British pound expires in 110 days. (a) Find the appropriate futures
price. [3M] (b) Find the futures price under the assumption of
continuous compounding. [3M] (c) Suppose the actual futures price
is $1.3250. Is the future contract mispriced? If yes, how could an
arbitrageur take advantage...
. 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?
Covered Interest Arbitrage. Assume the
following information:
* British pound spot rate = $1.65.
* British pound one-year forward rate = $1.65
* British one-year interest rate = 12 %.
* U.S. one-year interest rate = 10 %.
Explain how U.S. investors could use covered interest arbitrage
to lock in a higher yield than 9 percent. What would be their
yield? Explain how the spot and forward rates of the pound would
change as covered interest arbitrage occurs.
If the current one year spot rate is 1.45% and the current two
year spot rate is 1.78%, what is the one year forward rate at the
end of one year, assuming semi-annual compounding of spot rates and
forward rates?
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 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 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 ________.