If the firm uses money market hedge, one year from now, their accounts receivables will fetch them: O USD 17,578,125 OEUR 13,392,857 O EUR 18,750,000 O USD 16,741,071
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- Please use the data below, to answer the following question. Interest rate in US (Rh): Interest rate in Euro Zone (Rh): The current spot rate for EUR (SO): The expected spot rate for EUR 1 year later (S₁): What is the uncovered rate of return from the Euro Zone point of view (Ruf)? O 3.37% O 11.80% O 0.48% 7.5% 3.5% $1.25 $1.30 7.64%Suppose that the quote for Euro is 1.1120-44/EUR. If you want to buy 259, which of the following is closest to that amount of Euros that you will need to pay? O a. EUR 232.41 O b. EUR 288.32 O. EUR 232.91 O d. EUR 288.01 O e. EUR 288.632. If the euro interest rate is 6%, and the expected exchange rate is 1.06 USD per one euro. With different current Dollar/Euro exchange rate: 1.08, 1.09, 1.10, please calculate the expected dollar return on euro deposits and make analysis how to make investment decision under the above three current exchange rates? (The formula for reference: Expected Dollar Return on Euro Deposits: Re+(1.06-E)/E) Production per unit of Labor: Columbia United States Computer 30 150 Beef 40 80
- Assume the following information regarding U.S. and European annualized interest rates: Currency U.S. Dollar ($) 4.5% Investment Rate Borrowing Rate 5.5% Euro (€) 5.1% 6.3% Golden R Inc. can borrow either $6 million or €5 million. The current spot rate of the euro is $1.02. Furthermore, Golden R Inc. expects the spot rate of the euro to be $1.35 in 60 days. What is Golden R. Inc.'s dollar profit from speculating if the spot rate of the euro is indeed $1.35 in 60 days? Your answer should be whole US dollars. No decimals.Assume the following information: Spot rate of U.S. dollar Quoted Price AUD1.2500/USD 180-day forward rate of U.S. dollar 180-day Australian interest rate (a periodic rate) 180-day U.S. interest rate (a periodic rate) AUD1.2800/USD 4.75% 3.10% A. What USD-denominated percent rate of return can a US investor earn if they attempt covered interest arbitrage? (to two decimal places like 6.54%) B. What AUD-denominated percent rate of return can an Australian investor earn if they attempt covered interest arbitrage? (to two decimal places like 6.54%) C. Given this information, who has a covered interest arbitrage opportunity? Answer either "Australian investors" or "U.S. investors". D. What changes in the 2 quoted prices above would likely occur to eliminate any further possibilities of covered interest arbitrage? (answer with just or 1) Spot rate of U.S. dollar 180-day forward rate of U.S. dollarAssume the following information regarding U.S. and European annualized interest rates: Currency Lending Rate Borrowing Rate U.S. Dollar ($) 6.73% 7.20% Euro (€) 6.80% 7.28% Trensor Bank can borrow either $20 million or €20 million. The current spot rate of the euro is $1.13. Furthermore, Trensor Bank expects the spot rate of the euro to be $1.10 in 90 days. What is Trensor Bank's dollar profit from speculating if the spot rate of the euro is indeed $1.10 in 90 days? Group of answer choices $579,845. $583,800. $588,200. $584,245. $980,245.
- Suppose the spot price of a euro in dollars is $0.932. The U.S. interest rate for 90 days is 6.875% and the euro rate for 90 days is 4.450%. All interest calculations are done as rate times (#days/360). a. What is the rate for a 90-day forward contract on the euro? b. Suppose the euro forward contract is currently quoted at $0.95. What type of transaction(s) should an arbitrageur conduct to take advantage of the apparent mispricing Only typed answerIntegrating IRP and IFE Assume the following information is available for the United States and Europe: U.S. EUROPE Nominal interest rate 4% 6% Expected inflation 2% 5% Spot rate — $1.13 One-year forward rate — $1.10 Does IRP hold? According to PPP, what is the expected spot rate of the euro in one year? According to the IFE, what is the expected spot rate of the euro in one year? Reconcile your answers to parts (a) and (c).€ spot rate = 6-month forward rate = €1.20/£ Euro-zone interest rate = 3% p.a. U.K. interest rate = 2% p.a. What should the 6-month forward rate be if interest rate parity holds?
- b) Assume that the one-year interest rate is 3% (per annum) in the UK and 2% (per annum) in the Euro area. Also, assume that the current spot exchange rate of one pound to the euro is €1.1500/£ and that the corresponding one-year forward rate is €1.1400/£. i) Provide calculations to show whether the Interest Rate Parity (IRP) theory holds. ii) A UK-based investor has £200,000 to invest for a year either in the Euro area or the UK. Using the above information, determine which investment will generate a higher return for them. iii) Discuss the extent to which your results in i) and ii) above provide support to the Covered Interest Rate Parity (CIRP) condition.From a point of view of Omani investor, which of the following would be a direct quote in the foreign exchange market? * $1.15/Euro SR 10.2/OMR $2.60/OMR OMR 1.15/KWDPlease use the data below to answer the following question. Expected annual inflation rate in the US 6% (th) Expected annual inflation rate in Euro Zone (If) Current Exchange Rate again If one year later, the spot rate of EUR turns out to be $1.135, then the EUR experienced O a loss 2% no change 1 EUR USD 1.10 in "real" purchasing power.
