Question 5: Assume that You are risk manager at BIC Investment. BIC fırm wants to fix currencyrate for 5.000.000 USD export transaction in 120 days and 3.000.000 EURO import transaction in180 days from AC Bank. Find bid and ask forward rate of AC Bank by using exchange rates andinterest rates below.USD/TL: 13,3725/13,9850USD interest rate: 0,50/1,00TL interest rate: 21.00/27,00EURO/TL: 15,2700/15,4250EURO interest rate: 1,25/2,50

Forward must be according the interest going between the two currencies and should be in equilibrium…

1 5: Assume that You are risk manager at BIC Investment. BIC firm w 5.000.000 USD export transaction in 120 days and 3.000.000 EURO i s from AC Bank. Find bid and ask forward rate of AC Bank by using e rates below. EURO/TL: 15,2700/15,4250 EURO interest rate: 1,25/2,50 13,3725/13,9850 rest rate: 0,50/1,00 st rate: 21.00/27.00

1 5: Assume that You are risk manager at BIC Investment. BIC firm w 5.000.000 USD export transaction in 120 days and 3.000.000 EURO i s from AC Bank. Find bid and ask forward rate of AC Bank by using e rates below. EURO/TL: 15,2700/15,4250 EURO interest rate: 1,25/2,50 13,3725/13,9850 rest rate: 0,50/1,00 st rate: 21.00/27.00

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Assume that You are risk manager at BIC Investment. BIC firm wants to fixcurrency rate for 5.000.000 USD export transaction in 120 days and 3.000.000 EURO importtransaction in 180 days from AC Bank. Find bid and ask forward rate of AC Bank by usingexchange rates and interest rates below USD/TL: 5,8725/5,9850 EURO/TL: 6,6700/6,7250 USD faiz oranı: 4,50/5,00EURO Faiz Oranı: 6,25/7,50 TLLIBOR: 24,25/26,00
Assume that you are risk manager at BIC investment. BIC firm wants to fix currency rate for 5,000,000USD export transcation in 120 days and 3,000,000EURO import transcation in 180 days from AC Bank. Find bid and ask forward rate of AC Bank by using exchange rates and interest rate below. USD/TL : 13.37/13.98 EURO/TL : 15.27/15.42 USD interest rate: 0.50/1.00 EURO interest rate: 1.25/2.50 TL interest rate: 21.00/27.00
nswered Today you observe the folowing quotes: Spot EURUSD= $1.14 60 Day Forward EURUSD = $1.04 In 60 day you expec to receive 447,014 Euros. In 60 days you expect the EURUSD exchange rate to be $1.23. In 60 days the EURUSD actually is $1.03. You decided to not hedge your receivables. How many USD will you receive? 433,994.17
The current spot rates are: GBP (S/E) EUR (S/E) JPY (¥/$) Bid 1.115 1.025 102 13,000,000.35 You owe a customer in England £1 and you are owed 86. You currently have $13 million in the bank. How much will you have in the bank after both transactions are finished? Ask 1.168 1055 127 13,324,862.7451 margin of error +/-10
Use the information below to answer the following question. So($/€) F360 ($/€) Exchange Rate $ 1.45 € 1.00 = $ 1.48 = € 1.00 Interest Rate APR is i€ 4% 3% If you borrowed $1,000,000 for one year, how much money would you owe at maturity? Short Answer Toolbar navigation BIUS $1,524,400 A RN KE
Tyson Inc. wants to hedge an account receivable of ¥595 million to be received in six months using a money market hedge. Given a yen borrowing rate of 6% APR and a spot exchange rate of ¥119/$ how much is the yen denominated loan Tyson Inc. will need to borrow today worth when converted into dollars? Question 6 options: $4,926,108 $4,716,981 $5,000,000 $4,854,369
Match each term in Column A with its related definition in Column B.Column A1. Spot rate2. Currency appreciation3. Translation risk4. Transaction risk5. Exchange rateColumn Ba. The rate at which one currency can be traded for another currency.b. The possibility that future cash transactions will be affected by changing exchange rates.c. A month ago, $1 U.S. was worth 8.5 Mexican pesos. Today, $1 is worth 9.0 Mexicanpesos. The U.S. dollar has undergone what?d. The degree to which a firm’s financial statements are exposed to exchange ratefluctuation.e. The exchange rate of one currency for another for immediate delivery (today).
Q1-11 Suppose that a speculator notes that the current 3-month forward rate on the euro is $1.26 and the speculator expects that, in 3 months, the euro will have a value of $1.30. In this situation, the speculator would _______ euros on the forward market, and this activity ______ for the speculator. a. buy / involves risk b. buy / involves no possible risk c. sell / involves risk d. sell / involves no possible risk
James Clark is a foreign exchange trader with Citibank. He notices the following quotes. (12’)Spot exchange rate SFr1.2051/$Six-month forward exchange rate SFr1.1922/$Six-month $ interest rate 2.5% per yearSix-month SFr interest rate 2.0% per yeara. Is the interest rate parity holding? You may ignore transaction costs.b. Is there an arbitrage opportunity? If yes, show what steps need to be taken to make arbitrage profit. Assuming that James Clark is authorized to work with $1,000,000, compute the arbitrage profit in dollars.?
Hedging using forward rates: Assume the hypothetical spot rate between the USD and GBP was 1.6187 USD per GBP. Suppose you are purchasing 200000 GBP worth of Scotch Whisky deliverable (product and payment) in 3 months with the contract set up between you and your supplier on Friday. How much is that shipment worth in USD. Assume that you want to hedge against exchange rate risk, and go to the bank. The financial specialist at the bank gives you the official 3 month forward rate at 1.6175 USD per GBP. What does that imply for your payment to the bank in 3 months to get the 200000 GBP?
Foreign exchange investment involves risks and at the same time returns. Considering you will invest your peso @ P50 = $1 foreign exchange with a fixed interest of 5%, when can you say that you are fully maximized the value of your investment upon maturity? a. Interest and proceeds received in full deposit to a bank account b. Interest received in full with current exchange rate @ P52 = $1 but retained the money in USD while waiting for another investment. c. Interest received in full with current exchange rate @ 52 = $1 and converted the full proceeds to peso d. Interest received in full with current exchange rate @ 52 = $1 but converted the interest only while waiting for another investment.
Hedging using forward rates: Assume the hypothetical spot rate between the USD and GBP was 1.6187 USD per GBP. Suppose you are purchasing 200000 GBP worth of Scotch Whisky deliverable (product and payment) in 3 months with the contract set up between you and your supplier on Friday. How much is that shipment worth in USD. Assume that you want to hedge against exchange rate risk, and go to the bank. The financial specialist at the bank gives you the official 3 month forward rate at 1.6175 USD per GBP. What does that imply for your payment to the bank in 3 months to get the 200000 GBP? Assume the hypothetical spot rate between the JPY and USD was 101.25 JPY per USD. Suppose you are purchasing 2000000 JPY worth of microprocessors deliverable (product and payment) in 3 months with the contract set up between you and your supplier on Friday. How much is that shipment worth in USD. Assume that you want to hedge against exchange rate risk, and go to the bank. The financial specialist at the…

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