Your U.S. based MNC has a factory in Brazil. You will need to purchase an intermediate part onJune 1st in Brazil, at a cost of 1 million Brazilian Real.The exchange rate in the spot market is $1 to 4.8 Real. The exchange rate in the futures marketis currently 1 Real to $0.19 for December delivery, and the exchange rate in December turns outto be 1 Real to $0.175.If you hedge the full 1 million Real in the currency futures market, how much is your gain or lossin December (you will convert your Real back to dollars then)?O Gain of $15,000O Loss of $33,333O Loss of $18,333O Gain of $19,000

The spot exchange rate is the current and prevailing exchange rate. It is given the value of one…

Answered: Your U.S. based MNC has a factory in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume that a Malaysian commercial bank's bid quote of US dollar (USD) is RM4.1 and ask price is RM4.2. If you have ringgit, what is the amount of ringgit that you need to purchase 100,000 US dollars?
A large money center bank uses the US treasury yield curve to determine the appropriate level for its lending rates. To compensate for the costs of making a loan, the bank needs to charge 1.8% point more than the expected future interest rate on a Treasury security with the same maturity if it is to make a profit. The manager is considering a loan request from a customer seeking a one year loan that starts 2 years from today. If the two-year Treasury Strip rate is 4.1% and the three-year Treasury strip rate is 5.5%, at what minimum rate should the manager be willing to make the loan commitment?Enter your answer as a % to two decimal places. Assume the expectation theory of rates is valid and all liquidity premiums are zero.
When domestic currency deposits and foreign currency deposits are imperfect substitutes, the right-hand side of the interest parity condition equation_ 1) is added a term (p) that measures the risk premium on the domestic currency deposits. O2) is added a term (p) that measures the risk premium on the foreign currency deposits. 3) is subtracted a term (p) that measures the risk premium on the foreign currency deposits. 4) is multiplied by a term (p) that measures the risk premium on the foreign currency deposits.
A US firm plans to use a money market hedge to hedge its payment of five million British pounds for British goods in one year. The US interest rate is 5% and the British interest rate is 7%. The spot rate of the British pound is $1.65 and the one-year forward rate is $1.60.How many British pounds does the firm need to invest today?How many US dollars does the firm need to borrow today?
what will be the M3 when the M4 is 531 and the total deposit with post savings are 402
If the following explanation (or expression) is correct, please indicate "True". Or, if the following explana expression) is wrong, please indicate "False".
what will be the value of M3 when M4 is 50 and the total deposit with post savings are 10
The following data are given: Et = ¥ 105 = $1.00 Et+1 = ¥ 102 = $1.00 iU.S. = 13% %3D If the interest parity condition is expected to hold, interest rates in Japan should equal Type%. (Round your response to two decimal places.)
COVID-19 brought global economic and financial ramifications that were felt through global supply chains, from raw materials to finished products. Some term it as a black swan event that may finally force many companies, and entire industries, to rethink and transform their global supply chain model. If you are the CEO of a U.S. based company which is heavily dependent on foreign locations for sourcing and manufacturing, how would you make short-term and long-term plans to modify your supply chain model? List and discuss the main considerations or factors that will influence your decision.
Suppose the value of a new financial security increases with time, such that one dollar of the financial currency at year 0 is worth V(t) = exp{2/t-0.15f} dollars at time t. If the interest rate is 10 percent, after how many years should the financial asset be sold in order to maximize the PDV of the sale? (NOTE: Write your answer in number format, with 2 decimal places of precision level; do not write your answer as a fraction. Add a leading zero and trailing zeros when needed. Use a period for the decimal separator and a comma to separate groups of thousands.)
Suppose you have a 1,200,000 US dollar payable coming due in June and that the spot today is .98 US/CDN. You get a strike of .98 US and you are dealing with the PHLX. Suppose you are deciding whether or not to hedge out the foreign exchange risk. The size of the Canadian dollar contract on the PHLX is 50,000 Canadian dollars per contract. The option price is listed as 1.00 for the June put on Canadian dollars and .90 on the June call. Suppose you expect the US/CDN to be .97 on the last day of the option (the expiry date). This also happens to be the day you need to cover your payable. How much does it cost you to set up the hedge with brokerage cost set to zero? (In CANADIAN dollars approximately.) O A. 12,000 O B. 12,887 O C. 12,755 O D. 12,500
When refering 'simple specie currency' one is refering to: Select one: a) The same currency in various countries b) A policy of increasing a certain monetray standard in cirrculation c) A policy of deccreasing a certain monetray standard in cirrculation d) Various currencies in one country e) The various currencies in the world

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