Calculate the 90-day AUD/USD forward rate, for the case that the current spot rate is AUD/USD 0.9425 and the interest rate in the US is 4% and in Australia 2%.

Expert Solution

Current Spot Rate = 0.9425 AUD per USD

Calulating the 90-day Forward rate:-

where, n = no of days = 90 days

Forward rate = 0.9378 AUD per USD

So, the 90-day AUD/USD forward rate is 0.9378

jeff jeffy answered 2 years ago

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...

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...

Managing Transaction Exposures Assume the following information: Spot rate: CHF/USD = 0.7142 90-day forward rate: CHF/USD...

Managing Transaction Exposures Assume the following information: Spot rate: CHF/USD = 0.7142 90-day forward rate: CHF/USD = 0.7114 USD 90-day interest rate: 3.75% (APR) CHF 90-day interest rate: 5.33% (APR) The option data for July contracts is given the table below. Strike price (CHF/USD) Call Premium Put Premium 0.70 2.55¢ per CHF 1.42¢ per CHF 0.72 1.55¢ per CHF 2.4¢ per CHF 1-U.S. Company ABC, which exports to Switzerland, expects to receive CHF 450,000 in 90 days. Should Company ABC...

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?

Managing Transaction Exposures Assume the following information: • Spot rate: CHF/USD = 0.7142 • 90-day forward...

Managing Transaction Exposures Assume the following information: • Spot rate: CHF/USD = 0.7142 • 90-day forward rate: CHF/USD = 0.7114 • USD 90-day interest rate: 3.75% (APR) • CHF 90-day interest rate: 5.33% (APR) The option data for July contracts is given the table below. Strike price (CHF/USD) Call Premium Put Premium 0.70 2.55¢ per CHF 1.42¢ per CHF 0.72 1.55¢ per CHF 2.4¢ per CHF A. U.S. Company ABC, which exports to Switzerland, expects to receive CHF 450,000 in...

The spot rate of the US dollar is 70/USD and the three month forward rate is...

The spot rate of the US dollar is 70/USD and the three month forward rate is INR 72/USD. Is the rupee trading at discount t or premium? The 90-day interest rate is 1.5% in the US and 4% in India. The current spot exchange rate is INR 70/USD. What will be the 90-day forward rate? (CIP) The current spot rate for the JPY is INR 1.55. The expected inflation is 8% in India and 1.5% in Japan. What is the...

Spot rate USD/AUD 1.56. Assume annual interest rate is 3% in USA and 5% in Australi...

Spot rate USD/AUD 1.56. Assume annual interest rate is 3% in USA and 5% in Australi What should be the one-year forward rate USD/AUD per interest rate parity condition? Show that there is no arbitrage opportunity based on the forward rate that you computed. Compute arbitrage profit if one-year forward rate is USD/AUD 1.60. Pick any initial borrowing amount of your choice.

1.The current U.S. dollar-yen spot rate is 102¥/$. If the 90-day forward exchange rate is 101¥/$...

1.The current U.S. dollar-yen spot rate is 102¥/$. If the 90-day forward exchange rate is 101¥/$ what is the forward exchange premium or discount for ¥$. 2.Assume the current U.S. dollar-British spot rate is 0.71£/$. If the current nominal one-year interest rate in the U.S. is 2.7% and the comparable rate in Britain is 3.9%, what is the approximate forward exchange rate for 180 days?

On May 14, 2020, the spot rate for Australian Dollars was 0.7306 USD/ 1 AUD. The 180-day...

On May 14, 2020, the spot rate for Australian Dollars was 0.7306 USD/ 1 AUD. The 180-day (6 month) forward rate quoted in the market was for 0.7340 USD/1 AUD and the risk-free rate on 180-day securities was 2.90 percent APR for United States LIBOR and 1.96 percent APR for Australian LIBOR. (LIBOR rates are widely used as a reference rate for financial instruments.) Assume that the US is the home country. Are the quotes for AUD above relative to the USD direct...

Question