rates on the same 10) Your company can get yen loans for 2.0%. 4.5%. The spot yen per dollar exchange rate is 104. The forward rates for years I thru 4 are, 101.51, 99.08, 96.71, and 94.40, respectively. What is the present value of the market-maker's net cash flow if spot rates are 102 instead? A) $188.59 B) $206.43 C) $219.96
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- D4) Finance If the foreign interest rate is 4%, the risk premium on domestic assets, ρ, is 18%, and the expected rate of depreciation of the domestic currency against the foreign currency is 3%, what is the domestic interest rate in percentage terms, given covered interest parity holds? [All variables have a 1-year time frame.]1. Assume you notice the following information. Assume you spend $1 million USD to create an arbitrage trading strategy. What is your profit is USD. Remember to consider the profit after you pay back your loan Spot (CAD/USD)=1.75 • 1 Year Forward (CAD/USD) = 1.65 • 1 Year Canadian interest rate of 3% in Canadian Dollars (CAD) • 1 Year US interest rate of 4% in US Dollars (USD) 592,484.85Suppose that the current EUR/GBP rate is 0.6668 and the one-year forward exchange rate is 0.6742. The one-year interest rate is 1.8% in euros and 3.6% in pounds. You can borrow at most €1,000,000 or the equivalent pound amount. Suppose you are a pound-based investor. Determine the profit/loss (in GBP, no cents) if you borrow locally and invest in Euros.
- A3) Finance Currently, the GBP/USD rate is 1.5050 and the three-month forward exchange rate is 1.5269. The three-month interest rate is 6.2% per annum in the U.S. and 4.1% per annum in the U.K. Assume that you can borrow £1,000,000 or its equivalent in USD. How much do you make/lose if you borrow the local currency and invest abroad? (USD, no cents)Assume that QWER Co. has net receivables of 150,000 Singapore dollars in 90 days. The spot rate of the S$ is $.65, and the Singapore interest rate is 3% over 90 days. What is the dollar revenue in 90 days from the money market hedge? A. 124,350 B. 94,660 C. 89,765 D. 115,980 E. 109,874You have the following financial market information. You also have 1.34 million Australian dollar (A$) 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$0.0663 THB24.4134 THB29.8197 Loan rate 4.46% 8.77% Answer:
- What is the present value of a cashflow of EUR 5,327.21 arising in 276 days, using 4.2% as the rate of discount? I buy an investment for GBP 2,345,678.91 and sell it one week later for GBP 2,350,000.00. What is my yield? The interest rate for 6 months (183 days) is 9.00% and the rate for 7 months (214 days) is 9.15%. What is the rate for 193 days? A dealer quotes a customer 7.35% to borrow for one year with interest paid monthly. The customer prefers to pay interest quarterly. What rate should the dealer quote instead? Which of the following is the cheapest for a borrower?6.7% annual money market basis6.7% semi-annual money market basis6.7% annual bond basis6.7% semi-annual bond basis. What is the effective yield of a 45-day deposit in euros, with a nominal rate quoted of 4.6%? A company borrows US dollars at 5.1% for 183 days and then at maturity refinances the principal and interest at 5.3% for a further 92 days. What is the simple cost of borrowing over the 9 months?Tyson Inc. wants to hedge an account receivable of ¥595 million to be received in six months using a money market hedge. Given a yen borrowing rate of 6% APR and a spot exchange rate of ¥119/$ how much is the yen denominated loan Tyson Inc. will need to borrow today worth when converted into dollars? Question 6 options: $4,926,108 $4,716,981 $5,000,000 $4,854,369Please help and show calculation. Consider two companies: Honda and IBM. Honda wants to borrow US$ for the following 5 years at a fixed rate, while IBM wants to borrow Yen also for the following 5 years at a fixed rate. The rates available to two companies in US$ and Yen markets are shown below. US$ Yen Honda 8.0% 7.6% IBM 5.4% 6.6% 1. What is the total gain from the currency swap? Which firm has the comparative advantage in US dollar market, IBM or Honda?
- Suppose a firm makes purchases of $3.65 million per year under terms of 2/10, net 30, and takes discounts. What is the average amount of accounts payable net of discounts? (Assume the $3.65 million of purchases is net of discounts—that is, gross purchases are $3,724,489.80, discounts are $74,489.80, and net purchases are $3.65 million.) Is there a cost of the trade credit the firm uses? If the firm did not take discounts but did pay on the due date, what would be its average payables and the cost of this nonfree trade credit? What would be the firm’s cost of not taking discounts if it could stretch its payments to 40 days?Suppose that the exchange rate is 0.60 dollars per Swiss franc. If the franc appreciates 10% against the dollar, how many francs would a dollar buy tomorrow?The interest rate in Japan is 0.5% and the interest rate in the US is 4.5%. The spot exchange rate is ¥100 per dollar and the one year ahead forward rate is ¥98 per dollar. What is the profit made via covered interest arbitrage if you start by borrowing 1 million yen and investing in the US market? Assume borrowing and lending rates are identical. State the profits in dollars.