In: Finance
4. Ms. Sternin is a U.S. arbitrageur. The one-year interest rate offered in the U.S. is 1.0%, while the one-year interest rate offered in Australia is 3.25%. The spot rate is .96 AUD/USD. Kramerika Bank offers Ms. Sternin a one-year forward contract at 1.05 AUD/USD.
(1) Determine the arbitrage-free one-year forward contract exchange rate.
(2) Can Ms. Sternin make a risk-free profit? If yes, describe a covered arbitrage strategy.
(3) Determine Ms. Sternin's profits.
(4) Calculate the forward premium and compare it to the interest rate differential. Based on these numbers, what kind of capital flows will the U.S. economy experience?
3. The U.S. and Mexico both produce orange juice. A gallon of
orange juice sells in the U.S. for USD 5.75. An equivalent gallon
of juice sells in Mexico for MXN 70. The spot rate is .09
USD/MXN.
(a) According to purchasing power parity (PPP), what should be the
USD/MXN exchange rate?
(b) Take the U.S. as the domestic country. Calculate the real
exchange rate, Rt. Which country is more efficient?
(c) The Mexican GDP per capita is MXN 95,000. Translate this
amount to (nominal) USD and to PPP USD prices. (d) Suppose the
price of a gallon of juice in Mexico decreases to MXN 63 over the
next year, while the price of an equivalent U.S. gallon of orange
juice increases to USD 6.05. According to the linearized version of
relative PPP, what should be the USD/MXN exchange rate one-year
from now?
(e) Next year, the exchange rate is 12.8 MXN/USD. Generate a
trading signal based on PPP.
1. Assume a USD is worth JPY 81.26, (St=81.26 JPY/USD). Also, a JPY is worth CAD .0124 (St=.0124 CAD/JPY).
i. What is the cross rate CAD/USD?
ii. Suppose Kwiki Bank quotes St=.93 USD/CAD. Is arbitrage
possible? (Why?)
iii. If yes, describe a triangular arbitrage strategy and determine
an arbitrageur’s profits.
2. It is October 2012. Iris Oil Inc., a Houston-based energy company, has a CAD 300 million receivable due in June 2013. Iris Oil decides to use options to reduce FX risk. Available options with June maturity are:
X calls puts
.94 USD/CAD 2.49 0.29
.98 USD/CAD 1.68 1.77
1.00 USD/CAD 0.17 4.83
where X represents the strike price and premiums are expressed
in USD cents –i.e., 1.77 equals to USD 0.0177. Today, the exchange
rate is .98 USD/CAD.
A. Calculate the premium cost and use a graph to describe the net
cash flows (in USD) in June for Iris Oil under the following
choices:
i) in-the-money option
ii) out-of-the money option
B. Suppose Iris Oil can sell CAD forward at Ft,June = .99 USD/CAD.
Calculate the cash flows (in USD) in June for Iris Oil under the
forward contract. What are the pros and cons of the forward
contract relative to the option alternative?
In: Finance
1. In addition to U.S. corporations, what government groups compete for funds in the U.S. capital markets?
2. What foreign industry has privatization been most important in?
3. How does foreign investment help the U.S. government?
4. What is a key tax characteristic associated with state and local (municipal) securities?
5. What are three forms of corporate securities discussed in the chapter?
6. Do corporations rely more on external or internal funds as sources of financing?
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7. |
Explain the role of financial intermediaries in the flow of funds through the three-sector economy. |
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8. |
What are electronic communication networks (ECNs)? Generally speaking, are they currently part of the operations of the New York Stock Exchange and the NASDAQ Stock Market? |
|
9. |
Why is secondary trading in the security markets important? |
|
10. |
How would you define efficient security markets? |
|
11. |
The efficient market hypothesis is interpreted in a weak form, a semistrong form, and a strong form. How can we differentiate its various forms? |
|
12. |
What was the primary purpose of the Securities Act of 1933? |
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13. |
What act of Congress created the Securities and Exchange Commission? |
|
14. |
What was the purpose of the Sarbanes–Oxley Act of 2002? . |
In: Accounting
the U.S census bureau defines NAICS code 443141 as consisting of " U.S establishment known as appliance stores, primarily engaged in retailing an array of new household appliances, such as refrigerators, dishwashers, ovens, irons, coffeemakers, hair dryers, electric razors, room air- conditions, microwave ovens, sewing machines, and vacuum cleaners, or retailing new appliances in combination appliance repair services." there are more than 48000 stores that fall within this classification. one such establishment is plaza appliance mart, on monroe road in charlotte. does this information provided allow you to determine the structure of the market within which plaza appliance mart operates? explain
In: Economics
1.. How many total jobs in the U.S. were supported by FDI in the U.S. (direct and indirect) in 2013?
2. Which state’s exports supported the highest number of jobs? How many? Which state was number 2?
3. Which are the top 2 industries in Texas for exports?
4.What is the dollar value of Texas exports going to Mexico (in billions)?
In: Economics
As of March 2013, the U.S. deficit balance was $16 trillion. Why
do think the U.S. government should be concerned? Should the
government be equally concerned, if it were a surplus?
Your response should be at least 500 words in length.
In: Economics
1.Should consumers in, say, the U.S. be required to purchase only goods manufactured in the U.S. even if those goods cost more to produce?
As you know, recent trends in political rhetoric and trade indicate a movement away from a global marketplace and more toward protectionist trade policies. Is this a good or bad thing? Explain your answer.
2.Do the tenets or principles of classical liberalism align more closely with a conservative viewpoint toward entitlements, or with a progressive viewpoint of entitlements? Explain your answer.
In: Economics
|
Use the information below to answer the questions that follow. |
| U.S. $ EQUIVALENT | CURRENCY PER U.S. $ | ||
| Poland zloty | 0.2686 | 3.723 | |
| New Zealand dollar | 0.6414 | 1.5591 | |
| Australia dollar | 0.7002 | 1.4282 | |
| Jordan dinar | 1.4104 | 0.709 | |
| Bahrain dinar | 2.6525 | 0.377 | |
| If you have $4, how many Poland zlotys can you get? |
| How much is one Poland zloty worth? |
| If you have 7 million Poland zlotys, how many dollars do you have? |
| How many New Zealand dollars can you get for a Poland zloty? |
| What is the rate of the most valuable currency listed? |
| What is the rate of the least valuable currency listed? |
In: Finance
The credit or financial crisis 2007-2008 started in the U.S. Many people in the U.S. have got mortgages and later they couldn't pay back. These mortgage defaults caused many mortgage lending banks and companies to lose significantly and go bankrupt. As a result the housing prices started to fall causing a negative wealth effect and fall in consumer spending. The crisis was spread almost all of the countries in the world later. Why and how other countries were affected by the crisis originated in the U.S.
In: Accounting
Use the information below to answer the following questions.
U.S. $ EQUIVALENT CURRENCY PER U.S.
$ Polish Zloty .2979 3.3566
Euro 1.2213 .8188
M Peso .0752 13.2987
Swiss 1.0183 .9820
C Peso .002071 482.80
NZ Dollar .8087 1.2365
Singapore Dollar .8011 1.2483
a. If you have $160, how many Polish zlotys can you get? (Do not include the Polish zlotys sign, Z. Round your answer to 2 decimal places, e.g., 32.16.) b. How much is one euro worth in U.S. dollars? (Round your answer to 4 decimal places, e.g., 32.1616.) c. If you have 5.70 million euros, how many dollars do you have? (Enter your answer in dollars, not millions of dollars, rounded to the nearest whole dollar amount, e.g., 1,234,567.) d. Which is worth more, a New Zealand dollar or a Singapore dollar? e. Which is worth more, a Mexican peso or a Chilean peso? f-1. How many Swiss francs can you get for a euro? (Round your answer to 4 decimal places, e.g., 32.1616.) f-2. What do you call this rate?
In: Finance