You use today's spot rate of the Brazilian real to forecast the spot rate of the real for one month ahead. Today's spot rate is $0.4524. Assume that you obtain the end-of-month spot exchange rates of the Brazilian real during the end of each of the last 6 months. End of Month 1 2 3 4 5 6 Value of Brazilian real $0.4231 0.4179 0.4192 0.4542 0.4649 0.4524 Use the value-at-risk method to determine the maximum percentage loss of the Brazilian real over the next month based on a 95 percent confidence level. Do not round intermediate calculations. Round your answer to two decimal places.

You use today's spot rate of the Brazilian real to forecast the spot rate of the real for one month ahead. Today's spot rate is $0.4524. Assume that you obtain the end-of-month spot exchange rates of the Brazilian real during the end of each of the last 6 months. End of Month 1 2 3 4 5 6 Value of Brazilian real $0.4231 0.4179 0.4192 0.4542 0.4649 0.4524 Use the value-at-risk method to determine the maximum percentage loss of the Brazilian real over the next month based on a 95 percent confidence level. Do not round intermediate calculations. Round your answer to two decimal places.

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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An exchange rate is 0.7000 and the six‐month domestic and foreign risk‐free interest rates are 5% and 7% (both expressed with continuous compounding). What is the six‐month forward rate? a) 0.7070 b) 0.7177 c) 0.7249 d) 0.6930
Assume the following information is available for the United States and Europe: Nominal interest rate Expected inflation Spot rate One-year forward rate a. Does IRP hold? IRP -Select- $ U.S. 4% 2% $ in this case. b. According to PPP, what is the expected spot rate of the euro in one year? Do not round intermediate calculations. Round your answer to three decimal places. EUROPE 6% 5% $1.13 $1.10 c. According to the IFE, what is the expected spot rate of the euro in one year? Do not round intermediate calculations. Round your answer to three decimal places. d. Reconcile your answers to parts (a) and (c). Parts a and c combined say that the forward rate premium or discount is [-Select- of the euro. ✓the expected percentage appreciation or depreciation
If the interest rate in USD is 1%, and is 1.2% for Canadian Dollar deposits, find the forward price of a Canadian Dollar when the current exchange rate is 1.1, and expiration is three years from signing? b) If the Forward price of a Canadian dollar is currently 1.2, how could you use the synthetic to do arbitrage?
The spot rate for the Argentine peso is $0.3600 per peso. Over the year inflation in Argentina is 10% and U.S. inflation is 4%. If purchasing power parity holds, at year-end the exchange rate should be approximately ______________ dollars per Real. A. 0.2875 B. 0.2987 C. 0.3384 D. 0.3614
According to this morning's The National Post, you can exchange $1 for $0.77 U.S. in three months. Thus, the ________ is $1.30 Canadian. A. Backward rate. B. Forward rate. C. Futures rate. D. Triangle rate. E. Spot rate.
Suppose a basket of goods in Paris costs €134 and the same basket purchased in New York costs $151. a. At what exchange rate between euros and dollars is the cost of the basket the same in each city? b. Now suppose that over the next year inflation in France is expected to be 3% while in the U.S. the forecast is for 7% inflation. What exchange rate do you expect a year from now?
If spot rate is USD2.5968/OMR and interest rate for USD is 2% per annum. One-year forward exchange rate is USD 2.6008/OMR. If interest rate parity holds and USD is the Home currency, then calculate the interest for OMR? 1.8431% 0.021571% 2.1571% 0.018431%
1.
The Spot Exchange Rate is OMR 0.385030 = 1 USD and 90 days forward rate is OMR 0.394030 = 1USD (Home Currency is OMR, which is given as Direct quotes). Does the OMR is trading at premium or discount in 90 days forward market?
Today's spot exchange rate: 1 euro = $1.25.US interest rate (home interest rate) is 7%.EU interest rate (foreign interest rate) is 10%.a) If the IRP (Interest rate parity) holds, what should the forward exchange rate be today?b) Assume that today, you invest $500 in the EU market for one year and at the same time, enter a currency forward contract to sell euro in a year at the forward rate from part a). If today's spot exchange rate is: 1 euro=$1.32 instead of $1.25, show how much profits or losses you make next year.
eBook You use today's spot rate of the Brazilian real to forecast the spot rate of the real for one month ahead. Today's spot rate is $0.4517. Assume that you obtain the end-of-month spot exchange rates of the Brazilian real during the end of each of the last 6 months. End of Value of Month Brazilian real 1 $0.4255 2 0.4202 3 0.4194 4 0.4502 5 6 0.4598 0.4517 Use the value-at-risk method to determine the maximum percentage loss of the Brazilian real over the next month based on a 5 percent confidence level. Do not round intermediate calculations. Round your answer to two decimal places. % Forecast the exchange rate that would exist under these conditions. Do not round intermediate calculations. Round your answer to four decimal places.
17

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