There is a currency swap deal between Indian Bank and USA Bank for $10 millions @ interest rate of 3% on dollar and equal amount of rupees is exchanged by Indian bank @ interest rate of 7%P.A. The exchange rate on that day is ₹ 82 /$. The contract is for period of 5 years and interest rates are exchanged on yearly base. After 5 years the exchanged rate is ₹ 85/$. Calculate the funds flow between the banks.

There is a currency swap deal between Indian Bank and USA Bank for $10 millions @ interest rate of 3% on dollar and equal amount of rupees is exchanged by Indian bank @ interest rate of 7%P.A. The exchange rate on that day is ₹ 82 /$. The contract is for period of 5 years and interest rates are exchanged on yearly base. After 5 years the exchanged rate is ₹ 85/$. Calculate the funds flow between the banks.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter22: International Financial Management

Section: Chapter Questions

Problem 8P

See similar textbooks

Similar questions

XYZ entered into a currency swap with its bank, and borrowed $10 million at 9% and swaps for a 11% yen loan. The spot exchange rate is 95/$. How much is the annual interest to be paid to the bank.
XYZ entered into a currency swap with its bank, and borrowed $10 million at 9% and swaps for a 11% yen loan. The spot exchange rate is 95/$. How much is the annual interest to be paid to the bank. (Please use currency swap rating and Answer should be $2,000,000?)
Spot Exchange Rate is GBP 1.83155 = 1 OMR (For Immediate Delivery). Instead of buying GBP immediately you can enter into a contract with the bank to deliver the currency after 6 months. The bank has quoted 6 months forward rate as GBP1.83355 = 1 OMR. (Home Currency is OMR, which is given as Indirect quotes).
XYZ entered into a currency swap with its bank, and borrowed $10 million at 9% and swaps for a 11% yen loan. The spot exchange rate is 95/$. How much is the annual interest to be paid to the bank. (Please use the currency swap rating)
XYZ Corporation, located in the United States, has an accounts payable obligation of ¥1500 million payable in six months to a bank in Tokyo. The current spot rate is ¥116/$1.00 and the six month forward rate is ¥109/$1.00. The annual interest rate is 3 percent in Japan and 6 percent in the United States. a) What is the future dollar cost of meeting this obligation using the money market hedge a. $92,307. b. $ 19582168.89 c. $13054779.26 d. $ 6589854.111
Assuming you have the following information: the current exchange rate is SGD 0.40/ MYR. Meanwhile, the SGD 0.3907/ MYR of the three-month forward exchange rate. The interest rate of three- month is 5.6 percent per year in RB Malaysia. The interest rate of three-month is S.4 percent per year in CBC Singapore. Assume that you can borrow up to MYR1.000.000. (a) Assuming that you want to realize profit in terms of Ringgit Malaysia/SGD,determine the size of your arbitrage profits. b) Assume that you want to realize profit in terms of Singaporean Dollar. Thow the covered arbitrage process and determine the arbitrage profit in SGD.
I would appreciate it if this was done in excel please A US bank converts $ 1 million to SF to make an SF loan to a valued customer when the exchange rate was 1.53 SF per USD. The borrower agrees to repay the principal plus 6.25% interest in one year. The borrower repaid SF at loan maturity and when the loan was repaid the exchange rate was 1.63 SF per USD. What was the bank's dollar rate of return?
Arbitrage funds available = $6,000,500; Spot exchange rate (Kr/$) = 6.1430; 3-month forward rate (Kr/$) = 6.1720; US dollar 3-month interest rate = 3.100% per annum; Danish kroner 3-month interest rate = 5.100% per annum. You can invest $6,000,500, or the foreign currency equivalent of the bank's short term funds, in a covered interest arbitrage with Denmark. Using the above quotes, how much is the covered interest arbitrage profit? A) Kr58,690.96 B) $58,690.96 C) Kn,448.84 D) $1,448.84
A U.S. bank converted $1 million to Swiss francs to make a Swiss franc loan to a valued corporate customer when the exchange rate was 1.2 francs per dollar. The borrower agreed to repay the principle plus 5% interest in 1 year. The borrower repaid Swiss francs at loan maturity and when the loan was repaid the exchange rate was 1.3 francs per dollar. What was the bank's dollar rate of return? A. 26.00% B. -2.69% C. -3.08% D. 7.14%
Goodyear, a U.S. firm, sells tires to Airbus UK, and will receive payment of £1,000,000 in one year. Goodyear's bank quotes the information below: o The spot exchange rate is o The 1-year interest rate on dollars is ius = 2.00% e$/£ $1.50/£ %3D o The 1-year interest rate on pounds is iUK = 5.50% o The 1-year forward rate on pounds is fs/£ = $1.45/£ %3D In addition, Goodyear contacts private forecasters in the market and concludes: o The 1-year-ahead expected exchange rate on the Pound is eex £ = $1.40/£
A U.S. bank converted $50 million to euros to make a euro loan to a valued corporate customer when the exchange rate was €.625/$. The borrower agreed to repay the principal plus 4% interest in 1 year. The borrower repaid euros on the maturity date when the exchange rate was $1.75 per euro. What was the bank's percentage return (in terms of dollars)? Round intermediate steps to four decimals. -.0491 .0938 .1156 .1375
From the following data provided, ascertain what would be the exchange rates that the Bank would quote for an FDI transaction amounting to USD 2 Mn for value cash basis, assuming a margin of 3 paise where., Spot USD/INR = 75.0900/75.1000 ., Cash/Spot : 4/5 paise. Arrive at the exchange rate up to 4 decimal places. Adhere to the steps involved in calculation.