a) The NZD/MYR exchange rate is MYR1 = NZD0.3650 and the MYR/BTN exchange rate is BTN1...

a) The NZD/MYR exchange rate is MYR1 = NZD0.3650 and the MYR/BTN exchange rate is BTN1 = MYR0.1022. What is the BTN/NZD?

b) The USD/EUR exchange rate is EUR1 = USD0.95 and the EUR/SFr exchange rate is SFr1 = EUR0.71. What is the SFr/USD?

c) An investor wishes to buy euros spot at $0.9080/€ and sell euros forward for 180 days at $0.9146/€. What is the forward premiums or discount on 180-day euros?

d) Martin Kauer, a foreign exchange trader in Switzerland, has CHF 4,000,000 for shortterm money market investment and wants to make profit based on the following rates. Explain specific steps that Martin must take to make a covered interest arbitrage. State your answer in CHF.

6-month Swiss interest rate:	1.60% per annum
6-month Yen interest rate:	2.95% per annum
Spot rate:	¥ 93.1395/SFr.
6-month Forward Rate	¥ 93.8380/SFr.

Solutions

Expert Solution

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Dealer A quotes 1.5053 – 62 for the EUR/NZD exchange rate to company XYB. Calculate :...

Dealer A quotes 1.5053 – 62 for the EUR/NZD exchange rate to company XYB. Calculate : (i) the price at which A is willing to buy the EUR (ii) the price at which company XYB can buy the NZD (iii) the price at which A is willing to sell the EUR (iv) the price at which company XYB can sell the NZD (v) the dealer’s spread (vi) Dealer A also quotes EUR/USD 1.1832 – 700. Calculate USD/NZD.

Dealer A quotes 1.5053 – 62 for the EUR/NZD exchange rate to company XYB. Calculate: (i)...

Dealer A quotes 1.5053 – 62 for the EUR/NZD exchange rate to company XYB. Calculate: (i) the price at which A is willing to buy the EUR (ii) the price at which company XYB can buy the NZD (iii) the price at which A is willing to sell the EUR (iv) the price at which company XYB can sell the NZD (v) the dealer’s spread (vi) Dealer A also quotes EUR/USD 1.1832 – 700. Calculate USD/NZD.

USD/NZD 1.51 in nominal currency exchange rate terms. The same "The North Face" parka costs $230.00...

USD/NZD 1.51 in nominal currency exchange rate terms. The same "The North Face" parka costs $230.00 in the U.S. and 320.00 New Zealand dollars in New Zealand. The U.S. Federal Reserve Bank decides to raise interest rates. Based on the above scenario, please select the best answer choice below. I. If the U.S. Federal Reserve Bank raises interest rates, this will make it that much less attractive for New Zealanders to purchase the same parka from the U.S. If the...

1) At Bank X, the bid rate of a NZD is USD 0.630 and the ask...

1) At Bank X, the bid rate of a NZD is USD 0.630 and the ask rate is USD 0.635. However, at Bank Y, the bid rate of the NZD is USD 0.628 and the ask rate is USD 0.631. What would be your profit if you use USD 1,000,000 and try to execute locational arbitrage? A) + USD 11,146.50 B) + USD 1,587.30 C) - USD 1,584.79 D) - USD 11,023.62 2) At Bank X, the bid rate of...

1. Please examine the following information for New Zealand, the United States, and The USD/NZD exchange...

1. Please examine the following information for New Zealand, the United States, and The USD/NZD exchange rates: New Zealand United States 3-month Eurodollar deposit rates 2.33% 2.7375% Expected Inflation rates (annual) 1.90% 1.95% USD/NZD spot rate .6907 USD/NZD 3-month forward rate .6917 a. According to Interest rate parity are the spot and forward rates in alignment? If not, use covered interest rate arbitrage to show a profitable trade b. One year from now, according Relative Purchasing Power Parity (PPP), what...

The daily production data of a firm are given below. The wage rate is MYR 20...

The daily production data of a firm are given below. The wage rate is MYR 20 per day for each labor (variable input) and it is the only variable cost incurred. Additionally, output refers to the total products and it is in hundreds of units. Labor Output AP MP TVC TC MC AFC AVC ATC 0 0 - - 40 - - - - 1 18 2 37 3 57 4 76 5 94 6 111 7 127 a. Complete...

1. The daily production data of a firm are given below. The wage rate is MYR...

1. The daily production data of a firm are given below. The wage rate is MYR 20 per day for each labor (variable input) and it is the only variable cost incurred. Additionally, output refers to the total products and it is in hundreds of units. Labor Output AP MP TVC TC MC AFC AVC ATC 0 0 - - 20x0=0 40 - - - - 1 18 18 18/1=18 20x1=20 20x18=1.11 20x18=1.11 20x18=1.11 20x18=1.11 20x18=1.11 2 37 37/2= 18.5...

Question