Given CHF 3,500,000 as your capital, calculate the possible profit from covered interest arbitrage. Explain specific steps that you must take to make a covered interest arbitrage. Spot rate CHF 0.7359/BND 270-day forward rate CHF 0.7955/BND 9-month Brunei interest rate 5% 9-month Swiss interest rate 4% CHF Fr.= Swiss Franc. BND = Brunei Darul Salam.
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Given CHF 3,500,000 as your capital, calculate the possible profit from covered
interest arbitrage. Explain specific steps that you must take to make a covered
interest arbitrage.
Spot rate CHF 0.7359/BND
270-day forward rate CHF 0.7955/BND
9-month Brunei interest rate 5%
9-month Swiss interest rate 4%
CHF Fr.= Swiss Franc.
BND = Brunei Darul Salam.
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- Given CHF 3,500,000 as your capital, calculate the possible profit from covered interest arbitrage. Explain specific steps that you must take to make a coveredinterest arbitrage. CHF Fr = SwissFranc BND = Brunei Darul Salam Spot rate CHF0.7359/BND 270-day forward rate CHF 0.7359/BND 9-month Brunei interest rate 5% 9-month swiss interest rate 4% Step 1 1) Different i for Base rate -Quote rate = 2) Different between Spot and Forward = (1) + (2) = invest in _ borrow in _ Step 2 explain using tableGiven CHF 3,500,000 as your capital, calculate the possible profit from covered interest arbitrage. Explain specific steps that you must take to make a coveredinterest arbitrage. CHF Fr = SwissFranc BND = Brunei Darul Salam Spot rate CHF0.7359/BND 270-day forward rate CHF 0.7359/BND 9-month Brunei interest rate 5% 9-month swiss interest rate 4%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%
- The following exchange rates are available to you as Finance Manager for Ganado. (You can buy or sell at the stated rates.) Assume you have an initial SF 12,000,000. Can you make a profit via triangular arbitrage? If so, show the steps and calculate the amount of profit in Swiss francs (Swissies). Mt. Fuji Bank ¥92.00=$1.00 Mt. Rushmore Bank SF 1.02=$1.00 Mt. Blanc Bank ¥90.00=SF1.00Tony Fernandes, a foreign exchange trader in Canada, has CAD. 4,000,000 forshort-term money market investment and wants to make profit based on thefollowing rates. Explain specific steps that Tony Fernandes must take to makea covered interest arbitrage.6-month Canadian interest rate: 1.60% per annum6-month Yen interest rate: 2.95% per annumSpot rate: JYP 93.1395/CAD.6-month Forward Rate JYP 93.8380/CAD.CAD = Canadian DollarJYP = Japanese YenAssume the following information: U.S. investors have $1,000,000 to invest: 1-year deposit rate offered by U.S. banks = 10% 1-year deposit rate offered on Swiss francs = 13.5% 1-year forward rate of Swiss francs = $1.26 Spot rate of Swiss franc = $1.30 Does IRP hold? Is there an arbitrage opportunity?
- P is required to pay $300,000 in 1year, forward rate 1$ = 765 and spot rate 1$=760. Particulars India US 1 year Deposit Rate 1 year Borrowing Rate 5.00% 5.50% 4.50% 5.00% Calculate the amount payable under money market hedge.You have the following financial market information. You also have 1.34 million Australian dollar (A$) or 3.91 million Thai baht (THB) to make a profit due to covered interest arbitrage (CIA). Calculate the profit in A$ or THB if the CIA opportunity exists in the market. (enter the whole number without sign and symbol) THB spot rate THB one-year forward rate A$ spot rate A$ one-year forward rate Interest rate on A$ Interest rate on THB Bid price A$0.0408 A$0.0491 THB22.0891 THB27.5141 Deposit rate 2.28% 6.88% Ask price A$0.0606 A$0.0663 THB24.4134 THB29.8197 Loan rate 4.46% 8.77% Answer:1. Assume you notice the following information. Assume you spend $1 million USD to create an arbitrage trading strategy. What is your profit is USD. Remember to consider the profit after you pay back your loan Spot (CAD/USD)=1.75 • 1 Year Forward (CAD/USD) = 1.65 • 1 Year Canadian interest rate of 3% in Canadian Dollars (CAD) • 1 Year US interest rate of 4% in US Dollars (USD) 592,484.85
- Please use this information to answer the question below: A US firm's expected Accounts Receivables in Euro Zone due in 1 year Current Spot Rate (SR) for EUR Annual interest rate in US (Rh) Annual interest rate in Euro Zone (RF) EUR 15,000,000 USD 1.25 5% O use a money market hedge O use a forward hedge 12% If the 1-year Forward rate for EUR is $1.15, then based on all information given above, the firm should:You are the financial manager for Belltower Associates, which is headquartered in Australia. You have received the below spot and interest rates quotes from your bank: Bid Ask NZD 0.8298/AUD NZD 0.8340/AUD 4.50% 5.00% 0.90% 1.30% Spot exchange rate Interest rate for AUD Interest rate for NZD Suppose that Belltower Associates has a receivable in NZD in one year's time and they wish to engage in a hedge to lock in their domestic (i.e. Australian dollar) currency equivalent of its value. Belltower Associates intends to achieve this by using their bank's spot rates and money market interest rates in order to create a synthetic forward contract. What is the effective forward exchange rate that Belltower Associates is able to achieve for hedging the AUD value of their NZD receivable? O a. NZD 0.8012/AUD O b. NZD 0.8635/AUD O c. O d. O e. NZD 0.8298/AUD NZD 0.8594/AUD NZD 0.7974/AUD NZD 0.8085/AUDPlease Help The Swiss Franc is trading at 1.1464 $/ SFr, the euro is trading at 1.0828 $/euro. If you can buy or sell SFr/euro at 0.9451, is there an arbitrage? If so, how much can you make with one round - trip using $1,000,000 ? Please Help