Assume that Canadian dollar is equal to $0.80 and the Swiss franc is equal to $0.71.

Assume that Canadian dollar is equal to $0.80 and the Swiss franc is equal to $0.71. Then the value of the Swiss franc in terms of Canadian dollars (C$/SFr) is: a) 0.3621 Canadian dollars b) 0.8875 Canadian dollars c) 1.1267 Canadian dollars d) 2.51 Canadian dollars.

Expert Solution

First lets understand the quotes

It is given that $0.80 = CAD 1
- So $1 = CAD 1/$0.80
  - $1 = CAD 1.2500
It is given that $0.71 = SFr 1
- So $1 = SFr 1/$0.71
  - $1 = SFr 1.4085 (rounded to 4 decimal places)
This implies that CAD 1.25 = SFr 1.4085 = $1
- So SFr 1 = CAD 1.25/1.4085
  - SFr 1 = CAD 0.8875 (rounded to 4 decimal places)
So the correct answer is option b

jeff jeffy answered 2 years ago

Assume the canadian spot rate is 1.18C$/US$, the swiss franc spot rate is 1.29CHF/US$ and the...

Assume the canadian spot rate is 1.18C$/US$, the swiss franc spot rate is 1.29CHF/US$ and the market cross rate is 1.11CHF/C$ A. Calculate the implied cross rate of CHF/C$. B. Calculate the triangular profit. Assume you have US $1,000 to work with. State the currencies you need to buy and sell in order to earn the arbitrage profit

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...

In early 2012, the spot exchange rate between the Swiss Franc and U.S. dollar was 1.0404 ($ per franc).

In early 2012, the spot exchange rate between the Swiss Franc and U.S. dollar was 1.0404 ($ per franc). Interest rates in the United States and Switzerland were 0.25% and 0% per annum, respectively, with continuous compounding. The 3-month forward exchange rate was 1.0300 ($ per franc). What arbitrage strategy was possible? How does your answer change if the forward exchange rate is 1.0500 ($ per franc).

assume the Canadian dollar spot rate is 1.18c$/us$, the swiss spot rate is 1.29CHF/us$ and the...

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 triangular arbitrage profit, assume you have us$1000 to work with

Q6) In early 2012, the spot exchange rate between the Swiss Franc and U.S. dollar was...

Q6) In early 2012, the spot exchange rate between the Swiss Franc and U.S. dollar was 1.0404 ($ per franc). Interest rates in the U.S. and Switzerland were 0.25% and 0% per annum, respectively, with continuous compounding. The three-month forward exchange rate was 1.0300 ($ per franc). What arbitrage strategy was possible?

In early 2012, the spot exchange rate between the Swiss Franc and U.S. dollar was 1.0404...

In early 2012, the spot exchange rate between the Swiss Franc and U.S. dollar was 1.0404 ($ per franc). Interest rates in the U.S. and Switzerland were 0.25% and 0% per annum, respectively, with continuous compounding. The three-month forward exchange rate was1.0300 ($ per franc). What arbitrage strategy was possible? How does your answer change if the exchange rate is 1.0500 ($ per franc).

what changes have happened between the swiss franc and the US dollar currencies in the last...

what changes have happened between the swiss franc and the US dollar currencies in the last year. compare their value changes and explain the reason.

compre swiss franc and Us dollar currencies in the last year. include facts and inflation

Consider the following information available in the Citadel Bank: Spot Rate for the Canadian Dollar $0.80...

Consider the following information available in the Citadel Bank: Spot Rate for the Canadian Dollar $0.80 180 – day forward rate of the Canadian Dollar $0.79 180 – day Canadian interest rate 4% 180 – day U.S. interest rate 2.5% (a)Given this information, would it be a prudent strategy to engage in covered interest arbitrage? Explain (b)If covered interest arbitrage is profitable how much profit would an investor earn if he/she uses $1,000,000? (c)Briefly discuss the realignment process the will...

Let us assume that around Dec. 2019, the spot exchange rate between the Swiss Franc and...

Let us assume that around Dec. 2019, the spot exchange rate between the Swiss Franc and U.S. dollar was 1.0485 (USD per SWF). Interest rates in the United States and Switzerland were 0.75% and 0.25% per annum, respectively with continuous compounding. Assume also that the four-month forward exchange rate was 1.0630 (US$ per SWF) 1. Is there an arbitrage opportunity for you to make money? (Hint: Recall how to find no-arbitrage forward price!) 2. If there is NO arbitrage opportunity,...

Question