Question 1 As a foreign exchange trader at Sumitomo Bank, one of your customers would like a yen quote on AUD. Current market rates are as follows: • Spot ● ● ¥101.37-85/U.S.$ 1 A$1.2924-44/U.S.$ 1 30-day 15-13 20-26 a. What bid and ask yen cross rates would you quote on spot Australian dollars? b. What outright yen cross rates would you quote on 30-day forward Australian dollars? • c. What is the forward premium or discount on buying 30-day Australian dollars against yen delivery?

Question 1 As a foreign exchange trader at Sumitomo Bank, one of your customers would like a yen quote on AUD. Current market rates are as follows: • Spot ● ● ¥101.37-85/U.S.$ 1 A$1.2924-44/U.S.$ 1 30-day 15-13 20-26 a. What bid and ask yen cross rates would you quote on spot Australian dollars? b. What outright yen cross rates would you quote on 30-day forward Australian dollars? • c. What is the forward premium or discount on buying 30-day Australian dollars against yen delivery?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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D Question 13 Please use the data below, to answer the following question. BigMac price in the US BigMac price in UK Current Exchange Rate O $3.25 At the going exchange rate, the dollar price of BigMac in UK is: $3.40 $3.00 USD 3.25 $3.10 GBP 1.50 1 USD - GBP 0.5
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Question 2 Suppose that you are working for ANZ Bank as a foreign exchange trader and are currently exploring the opportunity of engaging a cover interest arbitrage possibility. You can invest New Zealand Dollar (NZD) 10,000 or British pound (GBP) 10,000. You faced the following exchange rate and interest rate quotes. Sport rate (NZD/GBP) One-year forward rate (NZD/GBP) One-year New Zealand 2.7450-2.7550 2.6450-2.6550 Interest rate 7.75%-8.25% One-year British interest Rate 3.75%-4.25% a) Show how to realize Covered interest arbitrage (CIA), assuming you want to realize in term of NZD and determine the arbitrage profit/losses. b) the arbitrage profit/losses. Assume that you want to realize in term of GBP. Show the CIA process and determine
Dineshbhai
Question 24 Suppose the spot rate is A$1.77/GBP. An Audi can be purchased in Sydney, Australia, for A$30,000 or in London, United Kingdom, for £17,860. The real interest rate is 3.5% p.a. for AUD and 1.5% for GBP, a) Calculate the real exchange rate of Sydney Audi per London Audi Is the real exchange rate consistent with the prediction of the absolute PPP? Explain b) Suppose the real interest parity holds, calculate the expected real exchange rate of per London Audi. Will the change in the real exchange rate lead to an increase in the Australia? Explain. y Audi ports of Edit View Insert Format Tools Table 12pt Paragraph BIU AV2v T²V 2 120 ***
A foreign exchange dealer in Kigali Rwanda provides quotes for the spot and 3 month forward rates for the RFr against the dollar. Bid (RFr/U$$) ask (RFr/U$$) Spot 4.0040 4.0200 3-month forward 3.9690 3.9888 Required: a. What would you receive in dollars if you sell RFr 5 million at the spot rate? b. What would it cost in dollars to purchase RFr 20 million forward 3 month? When would you make payment?
1 Suppose that 1-year interest rate in US is 2%, 1-year interest rate in Japan is 3%, spot exchange rate is Yen 110/$, 1-year forward rate is Yen 112/$. Will you prefer to invest in Japan or in US? No difference to invest in Japan or in US A₁ B₁ C₁ In China D₂ In US In Japan
Q1-10 If a PPP estimate of the dollar/pound exchange rate is $1.61/£ and the current spot rate is observed to be $1.68/£, on the basis of these two rates you should, viewing the long-run, a. expect the dollar to appreciate against the pound. b. take a "short" position in dollars. c. expect the pound to appreciate against the dollar. d. have no expectation regarding the likely movement of the dollar/pound exchange rate.
fINANCE
Express this quotation in an indirect form where the dealer is presenting prices to buy and sell the USD - that is make sure this currency is treated as the "foreign currency". USD/HRK 7.3658 / 7.3708 a. 7.3658 / 7.3708 O b. None of the other options O c.0.1357/0.1358 O d. 0.1358/0.1357 O e. 7.3708/ 7.3658
Q1-16 In which of the following relationships between the expected future spot rate [E(e)] of a foreign currency and the current forward rate (efwd) of a foreign currency would a speculator have an incentive to sell foreign currency in the forward market? a. E(e) < efwd b. E(e) > efwd c. E(e) = efwd d. E(e) = (1/efwd)

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