A French institutional investor wishes to decrease itsexposure to Taiwan. It is interested in selling 20,000shares of a particular Taiwanese firm that is currently inits portfolio. This firm trades on the Taiwan StockExchange. A Taiwan - based broker quotes the Taiwandollar (TWD) price of the shares of this firm as150.35-150.75, with a commission of 0.10 percent ofthe transaction value. The Taiwan Stock Exchangecharges a tax of 0.30 percent of the value traded fromthe seller. A bank is quoting the TWD/EUR exchangerate as 32.8675-32.8800. How many euros will theFrench institutional investor receive on selling theshares? Please provide detailed explanation, I'll makesure to upvote!

Number of shares to be purchased = 20000Price per share in Taiwan dollar (TWD) = 150.35-150.75here…

Answered: A French institutional investor wishes…

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

See similar textbooks

Similar questions

Suppose that you are a finance manager at a U.S. based MNC. On January 1st, you anticipate you will need to purchase C$170,000.00 (Canadian dollars) worth of supplies from a Canadian supplier in March using Canadian dollars (C$). The current spot rate for the Canadian dollar is $0.73. In order to lock in spot rate for this exchange, you purchase a futures contract specifying C$170,000.00 at $0.73 per Canadian dollar with a March 10th settlement date. On the settlement date, your MNC will need to pay (U.S. dollars) for the C$170,000.00.
2. You are a U.S. investor and wish to buy 10,000 shares of Club Méditerranée ("Club Med"). You can buy them on the Paris Bourse or on SEAQ International in London. You ask the brokers to quote you net prices (no commissions paid). There are no taxes on foreign shares listed in London. Here are the quotes: London (in £) Paris (in €) $/£ (dollars per pound) 1.5000 1.5040 €/S (euros per dollar) 0.91100 0.91200 What is your total dollar cost if you buy the Club Med shares at the cheaper place? 56-574 782-78%
You are a proprietary trader under the FX Group of BDO Treasury Department. Due to the political and economic uncertainties that is happening in the Euro zone and the improving economic conditions in the US, you are bearish on the EUR and bullish on the USD. Given this view, you want to short the EUR and take a net FX position of EUR 100MM. At what rate can you establish your position, assuming the market rate prevails at EUR/USD: 1.3223-1.3227 1.3227 Do not enter the transaction because of the political and economic uncertainties in the Eurozone. 1.3223 Based on the above position/view, w/c of the following outcomes, 1 week from now, will yield you FX gains? Scenario A: at EUR/USD 1.3245 – 1.3249 Scenario B: at EUR/USD 1.3230 – 1.3234 Scenario C: at EUR/USD 1.3216 – 1.3220 How many pips will you make assuming you bought the EUR back and that the desired scenario happens? 11 pips 7 pips 3 pips What is your profit is USD? $110,000.00 $80,000.00 $30,000.00
explain in details
Omni Advisors, an international pension fund manager, uses the concepts of purchasing power parity (PPP) and the International Fisher Effect (IFE) to forecast spot exchange rates. Omni gathers the financial information as follows: Base price level Current U.S. price level Current South African price level Base rand spot exchange rate Current rand spot exchange rate Expected annual U.S. inflation Expected annual South African inflation Expected U.S. one-year interest rate Expected South African one-year interest rate 100 105 111 $ 0.189 $ 0.172 Required: Calculate the following exchange rates (ZAR and USD refer to the South African rand and U.S. dollar, respectively): X Answer is complete but not entirely correct. $ $ $ 7% 5% a. The current ZAR spot rate in USD that would have been forecast by PPP. Note: Do not round intermediate calculations. Round your answer to 4 decimal places. ZAR spot rate under PPP Expected ZAR spot rate Expected ZAR under PPP 10% 8% b. Using the IFE, the…
Select each of the following strategies that can be used to hedge the foreign exchange risk of a British entity expecting to receive 1m INR in one year: Group of answer choices Borrowing GBP against the receivable, converting to INR, and investing the INR at Indian interest rates. Entering a long position in a forward contract on the INR. Entering a short position in a put on the INR. Entering a long position in a put on the INR. Borrowing INR against the receivable, converting to GBP, and investing the GBP at British interest rates. Entering a short position in a forward on the INR.
Which of the following reflects a hedge of net payables in British pounds by a U.S. firm? Group of answer choices a) purchase a currency call option in British pounds. b) sell pounds forward. c) borrower in US dollars, convert them to pounds, and invest them in a Britain. A and C
An international pension fund manager, uses the concepts of purchasing power parity (PPP) and the International Fisher Effect (IFE) to forecast spot exchange rates. Omni gathers the financial information as follows: Base price level 100 Current U.S. price level 105 Current South African price level 111 Base rand spot exchange rate $ 0.194 Current rand spot exchange rate $ 0.177 Expected annual U.S. inflation 7 % Expected annual South African inflation 5 % Expected U.S. one-year interest rate 10 % Expected South African one-year interest rate 8 % Calculate the following exchange rates (ZAR and USD refer to the South African rand and U.S. dollar, respectively): a. The current ZAR spot rate in USD that would have been forecast by PPP. (Do not round intermediate calculations. Round your answer to 4 decimal places.) b. Using the IFE, the expected ZAR spot rate in USD one year from now. (Do not round intermediate calculations.…
The table below contains the average returns, standard deviation of returns and correlation of returns with US indexfor different countries. All data are in US dollar terms. The US T-Bill rate is 3%. Determine which of thesecountries are suitable for a US based investor to diversifv into. Show the necessarv calculationsUS T-Bill Rate %3
Which of the following statements about the foreign exchange market is NOT true? The client market, also referred to as the retail market, is a segment of the FX market. FX brokers match buy and sell orders and carry a large inventory of foreign exchange. Nonbank dealers represent approximately 40% of the market. About 100-200 banks worldwide are prepared to make a market in foreign exchange.
A U.S. investor will receive dividend from a Sri Lankan coconut exporting company but worries about the depreciation of the Sri Lankan Rupee in six months due to the expectation in the interest rate rises by the Fed.a. Calculate hedging alternatives (1. Do Nothing (use spot and forward rates), 2. Forward Sale and 3. Options) and evaluate which alternative best suits to the U.S. investor.b. Keeping option premium fixed, what is the strike rate at which both options hedge and forward hedge yields are equal to each other?
On June 1, Maxwell Corporation (a U.S.-based company) sold goods to a foreign customer at a price of 1,170,000 pesos and will receive payment in three months on September 1. On June 1, Maxwell acquired an option to sell 1,170,000 pesos in three months at a strike price of $0.082. The time value of the option is excluded from the assessment of hedge effectiveness, and the change in time value is recognized in net income over the life of the option. Relevant exchange rates and option premia for the peso are as follows: Put Option Premium Spot Date for September 1 Rate (strike price $0.082) June 1 S 0.082 June 30 0.081 September 1 0.080 $ 0.0045 0.0032 N/A Maxwell must close its books and prepare its second-quarter financial statements on June 30. a-1. Assuming that Maxwell designates the foreign currency option as a cash flow hedge of a foreign currency receivable, prepare journal entries for the export sale and related hedge in U.S. dollars. a-2. What is the impact on net income over…

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS