Suppose that the 120-day forward rate is F=¥190/$. The spot rate
is S=¥180/$. Find the forward...
Suppose that the 120-day forward rate is F=¥190/$. The spot rate
is S=¥180/$. Find the forward premium or discount for the yen. Do
not use any unit. Also, make sure to round your answers to the
nearest 10000th decimal points.
Assume that the spot rate is €0.8144/$, the 180-day forward rate
is €0.7933/$, and the 180-day dollar interest rate is 6 percent per
year. What is the 180-day euro interest rate per year that would
prevent arbitrage?
The consumer price index for the United States (U.S.) rose from
approximately 121.4 in 1990 to approximately 199.3 in 2010.
a. How much inflation was there in the U.S. during the
twenty-year period?
b. What is the significance of the consumer price index...
1)The spot rate for the yen is ¥110/$ and the 180‑day forward
rate is $.008/¥ . Which of the following must be true in order to
prevent covered interest arbitrage?
a) interest rates for investments of similar risk must be equal
in both countries.
b) Interest rates for investments of similar risk must be higher
in Japan than the US.
c) Interest rates for investments of similar risk must be higher
in the US than in Japan.
d) Cannot be...
The $/£spot exchange rate is $1.60/£and the 180-day forward
exchange rate is $1.59/£. Is $ trading at forward premium or
forward discount relative to £? What about £? Calculate the forward
premium (discount) for $ and £.
Suppose that the $/€ spot exchange rate is 1.20 $/€ and the 1
forward rate is 1.24$/€. The yields on 1 U.S. and EU. Treasury
Bills are U.S 10% and EU 7%. Use the exact form interest parity
condition. Note that these numbers are hypothetically constructed
to give arbitrage profits.
(1) Calculate the covered interest differentials using Covered
IPC (extra profits from investing in EU).
(2) Suppose that U.S. investor is considering a covered
investment in EU Treasury bills financed...
1 A) The 90-day forward rate for the euro is $1.08, while the
current spot rate of the euro is $1.05. What is the annualized
forward premium or discount of the euro?
11.4% discount
11.4% Premium
7.6% premium
7.6% discount
1 B) Assume that a speculator purchases a put option on British
pounds (with a strike price of $1.50) for $.05 per unit. A pound
option represents 31,250 units. Assume that at the time of the
purchase, the spot rate...
The following is market information:
Current spot rate of pound
=
$1.45
90-day forward rate of pound
=
$1.46
3-month deposit rate in U.S.
=
1.1%
3-month deposit rate in Great Britain
=
1.3%
If you have $250,000 and use covered interest arbitrage for a
90-day investment, what will be the amount of U.S. dollars you will
have after 90 days?
The following is market information: Current spot rate of pound
= $1.23 90-day forward rate of pound = $1.24 3-month deposit rate
in U.S. = 1.1% 3-month deposit rate in Great Britain = 1.3% If you
have $250,000 and use covered interest arbitrage for a 90-day
investment, what will be the amount of U.S. dollars you will have
after 90 days?
Suppose that the U.S. dollar-pound sterling spot exchange rate
equals e= $1.60/£, while the 360-day forward rate is f 12 =
$1.64/£. The yield on a one-year U.S. Treasury bill is i ($) = 9%
and on a one-year U.K. Treasury bill the yield is i (£) = 8%. d. Is
pound sterling selling at a forward premium or discount versus the
U.S. dollar? Compute this value.
The Euro -Yen dollar spot rate is £$0.89/¥$. When the
45-day forward exchange rate is £$0.90/¥$ then the Euro forward
dollar is selling at
discount or premium of _________%