Calculate the forward rate for a 30-day Forward Contract given Spot Rate = 1.1542 AUD/CAD. The 30-day deposit rate in Canada is 5% and the corresponding rate in Australia is 8% (Note: The interest rates given are not annual rates but are for 30 days. No conversion necessary.)

Assume UK one-year money market interest rate is 8%. A Ghanaian firm is planning to borrow British pounds, convert them into cedi and repay the loan at the end of one year. Available information is that the cedi currency will depreciate by 21% against the pound sterling by the time of payment of the loan. Determine the effective financing cost of borrowing the British pound. Will you finance with a local loan costing 28% per annum or the pound sterling loan?

Currently, the spot rate is RM4.2000/USD and the one year forward rate is RM4.1000/USD. Interest rate in United States is 3% per annum and in Malaysia is 2% per annum. Assume that you can borrow as much as USD100,000 or RM420,000 for your coming project. If Interest Rate Parity (IRP) is not holding, determine how would you carry out covered interest arbitrage (CIA) and compute the profit.

Sulliver Travel Agency thinks interest rates in Europe are low. The firm borrows euros at 7 percent for one year. During this me period, the dollar falls 11 percent against the euro. What is the effective interest rate on the loan for one year? (Consid me 11 percent fall in the value of the dollar as well as the interest payment.) ote: Compute your answer from a U.S. perspective. Input your answer as a whole percent. Effective interest rate %

It costs 12.19 Mexican pesos to buy one US dollar. Interest rates on one year bonds of the Mexican government are 4.3%. Interest rates on one year bonds of the US government are 0.13%. How many peso would you expect to be able to sell for US$ using a forward contract that settles in one year?

Suppose that the current EUR/GBP exchange rate is £0.86 per euro. The current 6-month interest rates are: GBP 4%, EUR 6%. There are three 6-month forward contracts available, with the following exchange rates: Contract A B C EUR/GBP 0.86 0.85 0.90   You expect to incur an expense of €50,000 in six months. Can you identify any relevant risk in terms of the EUR/GBP exchange rate? Would you use any of the available forward contracts to hedge against this risk? Explain and provide an example.

Given 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?

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?

A UK company owes an American company $100,000 due to be paid in three months. The company wishes to avoid exchange rate risk, so borrows enough in sterling now and converts it immediately to dollars which are invested to bring in the required amount in three months' time. The following information is available: Spot rate $/£ 1.7755 - 1.7765 3-month interest rates: Sterling 3.250% US dollar 2.425% How much will the UK company have to borrow now to clear the debt in three months? A. £54,958 B. £54,989 £56,744 D. £56,775 C.

Suppose that the U.S. interest rate on one year Treasury notes was 4.7%. We will use this as the annual interest rate in the U.S. And suppose that the interest rate on the one-year German Treasury note was 4.2%. The spot rate is 1.0162 EUR/USD. And the 3-month forward rate is 1.0188 Eur/USD. Is there an opportunity for covered interest arbitrage? If so, what would be the total profit if we borrowed $25 million? OA YES-$27,395.21 would be the profit OB. YES-$33,385.41 would be the profit OC. YES-$37,342.89 would be the profit OD. NO- there is no opportunity for a profit