An investor can borrow $904,900 or equivalent pound. The current spot exchange rate is $2.0841/Pound, and the one-year forward rate is $1.9864/Pound. If a one-year interest rate in the US is 9.29%, the UK rate is 17.33%, what is the covered interest arbitrage profit?

Group of answer choices

2.5397%

1.4730%

2.6159%

3.0731%

2.0064%

The interest rate policy followed by the Central Bank of major world economies (USA, UK, Japan, Europe) are near zero or negative. Discuss the implication this low-interest rate policy for any one type of financial institution (banks, savings, and loans, insurance companies, pension funds, mutual funds, etc.) and examine its possible impact.

How much is your arbitrage profit in Euros at expiration, if you know that the current exchange rate is Euro 1.2 / GBP, the 60-day forward rate is Euro 1.16 /GBP, the risk free rate in Europe is 2% and the risk free rate in the UK is 4%? Make your calculation so that the spot transaction is for GBP 500,000.

1. The risk-free rate in the US is 5% and the UK risk-free rate is 8%. The spot quote is $1.80/£ while the one year forward quote is $1.78/£. You can borrow either $1,000,000 or £555,556. According to IRP, is the forward quote correct? If not, what should it be?

If the forward quote is not correct, lay out the steps to implement an arbitrage.

Daniel, age 38, is single and has the following income and expenses in 2019:

Daniel's standard deduction for 2019 is $12,200.

a. Classify the following expenses as either "Deductible for AGI", "Deductible from AGI", or "Not deductible".

What is Daniel's gross income and his AGI?
Gross income: $_____
AGI: $______

b. Should Daniel itemize his deductions from AGI or take the standard deduction?
Because Daniel's total itemized deductions (after any limitations) are $_______, he would benefit from ________ .

Daniel, age 38, is single and has the following income and expenses in 2019:

Daniel's standard deduction for 2019 is $12,200.

a. Classify the following expenses as either "Deductible for AGI", "Deductible from AGI", or "Not deductible".

What is Daniel's gross income and his AGI?
Gross income: _____
AGI: ______

b. Should Daniel itemize his deductions from AGI or take the standard deduction?
Because Daniel's total itemized deductions (after any limitations) are ______, he would benefit from _________.

James is an African American heterosexual male who is also a counselor at a community mental-health center. Though James does not outwardly reject others with different sexual orientations, he is not empathetic toward people struggling with sexual identity issues. James feels that homosexuality is morally wrong and against his religious beliefs. However, James understands that as a counselor he must not discriminate against anyone – including sexual minorities. Clarence, a new client, has revealed that he is homosexual and is having difficulty admitting his sexual orientation to his family and others close to him. Clarence has also states he fears being rejected by his church congregation. He states that being abandoned by the church would further “shame his family” but admits that he cannot keep his life a secret anymore. He wants James’s help to embrace his homosexuality and live without shame.
Respond to the following:

For James to genuinely help Clarence, what issues does James need to address at a personal level to refrain from being judgmental of Clarence?

Is it possible for James to be objective enough to help Clarence work toward his goals? Why or why not?

As a risk manager for XYZ corporation, you are assessing the firm’s various risk exposures to include in a regular semi-annual report to upper management.

XYZ is a medium-size import/export firm located in Cambridge, UK. Its primary sources for imports, which it sells in the UK and Eurozone, are located in China and Vietnam. It has customers throughout the world, but more than half of its exports go to Africa. XYZ customarily borrows to cover funds tied up in exports.

Further, XYZ has recently launched its own online B2B (Business-to-Business) platform.

Q1. Identify seven types of risk exposures you should report and provide a brief explanation for each risk exposure.

Q2. Suppose the firm’s board needs your views on the trade-off of hedging against the identified risks.

Briefly discuss what kind of value can be generated by risk hedging, when risk hedging is most likely to generate value and when it is least likely to do so.