Market observes the “exchange rates” as of today:($1/$0)=0.95 , ($2/$0)=0.87 1. What is the implied interest rate between time t=0 and t=2 ? 2. Now there is a project with three certain cashflows: CF0=−$10MM CF1=$5MM CF2=$7MM What is NPV0? 3. How much is CF1 worth at t=2?
Market observes the “exchange rates” as of today:($1/$0)=0.95 , ($2/$0)=0.87 1. What is the implied interest rate between time t=0 and t=2 ? 2. Now there is a project with three certain cashflows: CF0=−$10MM CF1=$5MM CF2=$7MM What is NPV0? 3. How much is CF1 worth at t=2?
Chapter5: Currency Derivatives
Section: Chapter Questions
Problem 28QA
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Market observes the “exchange rates” as of today:($1/$0)=0.95 , ($2/$0)=0.87
1. What is the implied interest rate between time t=0 and t=2 ?
2. Now there is a project with three certain cashflows:
CF0=−$10MM
CF1=$5MM
CF2=$7MM
What is NPV0?
3. How much is CF1 worth at t=2?
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