Question
In: Finance
A U.S. firm has a payable of €1,450,000 in one year. Forward rate quotes are €.805/$ bid and €.807/$ ask.
A U.S. firm has a payable of €1,450,000 in one year. Forward rate quotes are €.805/$ bid and €.807/$ ask. If the U.S. firm hedges with a forward, what is the guaranteed cost in USD for the payable?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Bid/Ask on Aussie Dollar Forward. Use the following spot and forward bid-ask rates for the U.S....
Bid/Ask on Aussie Dollar Forward. Use the following spot and
forward bid-ask rates for the U.S. dollar/Australian dollar
(US$=A$1.00)
exchange rate from December 10, 2010, to answer the following
questions:
a. What is the midrate for each maturity?
b. What is the annual forward premium for all maturities?
c. Which maturities have the smallest and largest forward
premiums? (Click on the
icon to import the table into a spreadsheet.)
Period
Bid Rate
Ask Rate
spot
0.98490
0.98512
1 month...
What is an exchange rate, a spot rate and forward rate? What is the bid-ask spread...
What is an exchange rate, a spot rate and forward rate? What
is the bid-ask spread and give an example from real data? What are
the drivers of the bid-ask spread? What is a forward premium and
discount and use real data to show an example of one of them and
interpret the result?
What is an exchange rate, a spot rate and forward rate? What is the bid-ask spread...
What is an exchange rate, a spot rate and forward rate? What is
the bid-ask spread and give an example from real data? What are the
drivers of the bid-ask spread? What is a forward premium and
discount and use real data to show an example of one of them and
interpret the result?
Use the following forward bid-ask, and interest rates for of AUD and USD, Spot rate in...
Use the following forward bid-ask, and interest rates
for of AUD and USD,
Spot rate in AUD/USD: 1.2010-16
180-day forward rate in AUD/USD: 1.2231-39
The annual interest rates for AUD (lending or
borrowing): 4%, 5%; for USD: 2%, 3%
Assume a year has 360 days, to answer:
Find the mid rates of these rates and use PPP to
explain if:
the 180 days forward rate > expected 180 days spot rate
an investor can make profit by investing or borrowing...
The spot rate between the U.K. and the U.S. is £.7554/$, while the one-year forward rate...
The spot rate between the U.K. and the U.S. is £.7554/$, while
the one-year forward rate is £.7528/$. The risk-free rate in the
U.K. is 4.35 percent and risk-free rate in the United States is
2.62 percent. How much in profit can you earn on $5,000 utilizing
covered interest arbitrage?
The spot rate between the U.K. and the U.S. is £.7604/$, while the one-year forward rate...
The spot rate between the U.K. and the U.S. is £.7604/$, while
the one-year forward rate is £.7538/$. The risk-free rate in the
U.K. is 4.55 percent and risk-free rate in the United States is
2.72 percent. How much in profit can you earn on $10,000 utilizing
covered interest arbitrage?
The spot rate between Canada and the U.S. is Can$1.2416/$, while the one-year forward rate is...
The spot rate between Canada and the U.S. is Can$1.2416/$, while
the one-year forward rate is Can$1.2415/$. The risk-free rate in
Canada is 4.43 percent and risk-free rate in the United States is
2.66 percent. How much in profit can you earn on $7,000 utilizing
covered interest arbitrage?
Suppose a bank quotes $/€ = 1.1045-1.1506. What is the bid-ask spread in percentage? Do not...
Suppose a bank quotes $/€ = 1.1045-1.1506. What is the bid-ask
spread in percentage? Do not write any symbol. Express your answers
as a percentage. Make sure to round your answers to the nearest
100th decimal points. For example, write 12.34 for 12.34%.
Suppose you receive the following quotes from a dealer. The bid and ask prices for USD...
Suppose you receive the following quotes from a dealer. The bid
and ask prices for USD are MYR4.15 and MYR4.18, respectively. The
same dealer also quotes the bid and ask prices for GBP to be at
MYR5.10 and MYR5.15. Given the following quotes, calculate the USD
cost of obtaining GBP10,000.
A. $8,058
B. $8,196
C. $12,200
D. $12,410
Suppose you get the following exchange rate quotes:
MYR4.4365/USD, MYR3.34/AUD, and USD0.74/AUD. Determine the
triangular arbitrage profit that is possible if you...
Assume Alcoa has access to the following quotes: U.S. borrowing rate for 1 year = 9.5%...
Assume Alcoa has access to the following quotes:
U.S. borrowing rate for 1 year = 9.5%
U.S. deposit rate for 1 year = 8.7%
French borrowing rate for 1 year = 11.3%
French deposit rate for 1 year = 10.2%
euro spot quote = $1.2363?78
euro 1 year forward quote = $1.2329?47
What value can Alcoa lock in for a receivable of euro3 million
due in one year if it executes a money market hedge today?
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