Question

In: Finance

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.

Solutions

Expert Solution


Related Solutions

Assume that the spot rate is €0.8144/$, the 180-day forward rate is €0.7933/$, and the 180-day...
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 $.008/¥ ....
1)The spot rate for the yen is ¥110/$ 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...
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...
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...
The spot rate for the Singapore dollar is £0.320 and the 30-day forward rate is £0.325....
The spot rate for the Singapore dollar is £0.320 and the 30-day forward rate is £0.325. At what discount or premium is Singapore dollar selling?                       
1 A) The 90-day forward rate for the euro is $1.08, while the current spot rate...
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...
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...
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...
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 the45-day forward exchange rate is £$0.90/¥$...
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 _________%
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT