An Austra ian companv has decided to issue a 90-dav bank-accepted bill domestically to raise additionafunding of S18000 to buy equipment. If the bank has agreed to discount the bill at a yield of 8.5% per annum,which of the following values will the face value of the bill be closest to
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An Austra ian companv has decided to issue a 90-dav bank-accepted bill domestically to raise additionafunding of S18000 to buy equipment. If the bank has agreed to discount the bill at a yield of 8.5% per annum,which of the following values will the face value of the bill be closest to? a.S17913.31 b.S17641.62 O c.S18744.81 d.$18377.26 e.s17630.48 f.s18000.00 g.S18382.50.
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- An Australian company has decided to issue a 90-day bank-accepted bill domestically to farac adamionar funding of $480000 to buy equipment. If the bank has agreed to discount the bill at a yield of 7.06% per annum, which of the following values will the face value of the bill be closest to? O a. $488472.00 O b. $488355.95 O c. $471787.03 O d. $502664.77 e. $484177.97 O f. $480000.00 g. $478686.48An American rm owes SFr 6, 000, 000.00 payable in one year. The current spot it$1.3750/SFr. A Swiss bank is paying 1.50% on deposits or will lend at 6.50% AU.S. bank is paying 4.50% or will lend at 8.00%. The rm would like to hedge this exposurewith money market hedging. How much do they need to borrow todayGiven we have 100,000 EUR in an EU bank account we consider the below options: "A" - to deposit the money today in a special savings account in the local bank at the current interest rate at r= 1% for one year. • "B" - to convert the amount into the USD if today's exchange rate is E, is €1/$1, transfer and deposit the money in a USA bank at the going interest rate there at r* = 5% for one year. Make an agreement today to convert and return a specified amount of US $ to € one year from today based on the forward exchange rate (F ) of €1.25/$1. The forward exchange contract can be signed today to eliminate any uncertainty. Which of the two is better?
- Case: ER001 on Forex in Trade Finance Bill Amount: USD 100,000.00 You (AD1 Bank in India) are negotiating an Export Bill (under LC) under the Post shipment finance limit (in INR) for your exporter client. You have agreed with client on the post- shipment finance Interest Rate as 10% p.a., payable upfront. How much INR would you credit to the exporter's account on negotiation. Payment Terms: At 60 days after sight Exchange Rate Margin: 0.15% Spot USD/INR=75.5000/5500 Forward Premium 1M: 0.0800/0.1000 Forward Premium 2M: 0.1400/0.1550 • Forward Premium 3M: 0.2300/0.2400 More information provided here ->EUROCREDIT LOAN:A Swiss sporting goods company borrows in yen in the Eurocredit market at a rate of 4.94 percent from Bank of America using a three-month rollover loan. Bank of America assigns a default risk premium of 1.93 percent on the loan, and the country risk is an additional 0.76 percent. The bank can borrow funds in the Euromarket at the three-month LIBOR rate of 0.30 percent. What is Bank of America’s gross profit margin on this loan?One year borrowing and deposit interest rates are 12.5% and 10.5% respectively in the US and 10.5% and 8.5% respectively in Germany. The spot exchange rate for the US dollar is $1.50 to the EURO. The 12-month forward rate is $1.55.i) Assuming you do not have any initial investment funds, suggest a way you might profit from the pricing inconsistency presented above. Start with a borrowing amount and then explain and calculate the gain/loss with the rates that you will borrow and deposit.ii) Will the situation persist forever? Explain your answer.
- The spot rate is $0.51/CAD1. Platinum Bank undertakes arbitrage transactions in CAD using a sum of $100 million. Annual interest rates are 9.8 per cent in Australia and 5.8 per cent in Canada. The bank can borrow or lend at these rates. What is the expected spread, if the forward rate is $0.55/CAD1? a. 2.5788% O b. 4.2980% c. None of the options is correct d. 3.6533% e. 5.5875%XYZ Corporation, located in the United States, has an accounts payable obligation of ¥1500 million payable in six months to a bank in Tokyo. The current spot rate is ¥116/$1.00 and the six month forward rate is ¥109/$1.00. The annual interest rate is 3 percent in Japan and 6 percent in the United States. a) What is the future dollar cost of meeting this obligation using the money market hedge a. $92,307. b. $ 19582168.89 c. $13054779.26 d. $ 6589854.111Please use this information to answer the question below. A US firm's expected Accounts Receivables from Canada due in 90 days Current Spot Rate (SR) for CAD The 90-day Forward Rate for CAD If the US firms uses a forward hedge, estimate the cost of hedging the receivable if the spot rate for CAD 90 days later turns out to be $0.65 O $100,000 O Ⓒ$60,000 CAD 2,000,000 $0.70 $0.68 O 4
- Suppose a German importer owes an Australian exporting company 150,000 AUD, due in three months. What is the expected value of payables in AUD under hedge?Newstar Co. expects to pay 500,000 euro in one year. Assume the annual interest rate of borrowing or lending euro is 1% and the annual interest rate of borrowing or lending U.S. dollar is 2%. The spot rate of euro is $1.12 per euro. How much guaranteed amount of U.S. dollar does the company expect to pay after hedging the euro payable transaction in the international money market? (pick the closest answer) A. 565,545 USD. B. 554,510 USD. C. 562,786 USD. D. 576,912 USD.Suppose a German importer owes an Australian exporting company 150,000 AUD, due in three months. S_0 (EUR/AUD) 0.60 Se (EUR/AUD) 0.50 (0.3) and 0.65 (0.7) Premium on AUD call option R = EUR0.02 Exercise exchange rate E = 0.62 Time to expiry 3 months What is the expected value of payables in AUD under hedge Will the option to hedge be undertaken on the basis of expected spot rate? Explain.
