a. What is the mid-rate for each maturity? b. What is the annual forward premium for all maturities? c. Which maturities have the smallest and largest forward premiums?
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Problem 4. Use the following spot and forward bid-ask rates for the U.S. dollar/euro (USS/€) exchange rate from December 10, 2010, to
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- Match each term in Column A with its related definition in Column B. Column A 1. ____________ Spot rate 2. ____________ Currency appreciation 3. ____________ Translation risk 4. ____________ Transaction risk 5. ____________ Exchange rate Column B a. The rate at which one currency can be traded for another currency. b. The possibility that future cash transactions will be affected by changing exchange rates. c. A month ago, 1 U.S. was worth 8.5 Mexican pesos. Today, 1 is worth 9.0 Mexican pesos. The U.S. dollar has undergone what? d. The degree to which a firms financial statements are exposed to exchange rate fluctuation. e. The exchange rate of one currency for another for immediate delivery (today).1. – Using the following information, determine each one of the theoretical Exchange Rates (E.R.) for December of year 02 according to the Relative PPP Theory. MARKET MARKET E.R. E.R. COUNTRY CURRENCY СРI CPI Dec-01 Dec-02 Dec-01 Dec-02 Mexico МХР 231.89 264.3546 19.56 20.15 Turkey TRY (Lira) 498 527.88 5.9419 6.07673 Australia AUD 989 1038.45 1.7759 1.81183 Japan JPY 678 745.8 105.866 113.978 United Kingdom GBP 905.26 986.7334 0.5991 0.617849 South Korea KRW (Won) 795.4 874.94 1,658.62 1,793.37 Canada CAD 523.12 554.5072 1.3736 1.4942 U.S.A. USD 1.5 1.56Question 2 The following wholesale exchange rates are taken from Oanda.com on September 21, 2020. Currency Pair AUD/USD Bid Ask 0.7306 0.7307 AUD/JPY AUD/CAD AUD/NZD 76.25 76.32 0.9626 0.9634 1.0781 1.0795 AUD/CHF 0.6648 0.6653 The forward quotes in point form are as follows for the currency pairs AUD/USD and AUD/CHF as of September 21, 2020. Currency 1-month forward 3-month forward 1-year forward Pair points points points Bid Bid Ask Bid Ask Ask AUD/USD AUD/CHF 0.6000 0.7000 2.000 2.3000 4.000 5.5000 -6.4000 -6.2400 -16.9000 -16.5200 -70.5000 -68.5000 d) Calculate the outright forward rates for the currency pair AUD/CHF. e) Calculate the outright forward rates for the currency pair AUD/USD. f) Calculate the forward premium (discount) based on the rates calculated in e) above. g) Do the forward rates imply a strengthening or weakening of the USD with respect to the Australian dollar? Explain your logic.
- Question 2 The following wholesale exchange rates are taken from Oanda.com on September 21, 2020. Currency Pair AUD/USD Bid Ask 0.7306 0.7307 AUD/JPY AUD/CAD AUD/NZD AUD/CHF 76.25 76.32 0.9626 0.9634 1.0781 1.0795 0.6648 0.6653 Note: The quotes above are in the base currency/quote currency format. For instance, AUD/USD indicates that AUD is the base currency and USD is the quote currency. The quotes indicate how much of the quote currency is needed for you to get one unit of the base currency. a) Create a table showing the bid and ask quotes of each of the following currency pairs: USD/CAD; JPY/CAD; JPY/NZD; CHF/JPY. b) If you were to buy JPY 100,000 on September 21, how many Australian dollars do you need for the purchase at the above rate? c) If you were to sell NZD 250,000 on September 21, how many Australian dollars will you receive using the rate given above? The forward quotes in point form are as follows for the currency pairs AUD/USD and AUD/CHF as of September 21, 2020. 1-year…Study this Case and Answer Question Asked Below: On 19 April Following are the Spot Rates Spot EUR/USD 1.2000 USD/INR 44.8000 Following are the quotes for European Type Options Currency Pair Call/Put Strike Price Premium Expiry Date EUR/USD Call 1.2000 $0.035 July 19 EUR/USD Put 1.2000 $0.04 July 19 USD/INR Call 44.8000 Rs.0.12 Sep 19 USD/INR Put 44.8000 Rs.0.04 Sep 19 A Dealer believes that the spot rate for the Dollar will rise to INR 45.00 by September 19. So he decides to buy at the money call options. If his expectations are correct, his profit from BUYING call options FOR USD1.5 Million will be INR______. a. 110,000 b. 100,000 c. 120,000 d. 80,000Study this Case and Answer Question Asked Below: On 19 April Following are the Spot Rates Spot EUR/USD 1.2000 USD/INR 44.8000 Following are the quotes for European Type Options Currency Pair Call/Put Strike Price Premium Expiry Date EUR/USD Call 1.2000 $0.035 July 19 EUR/USD Put 1.2000 $0.04 July 19 USD/INR Call 44.8000 Rs.0.12 Sep 19 USD/INR Put 44.8000 Rs.0.04 Sep 19 If a dealer is Bullish on USD. He should a. Sell EUR/USD Put Option b. Buy EUR/USD Call Option c. Buy EUR/USD Put Option d. None of the above
- Question 1 As a foreign exchange trader at Sumitomo Bank, one of your customers would like a yen quote on AUD. Current market rates are as follows: Spot ● ● ● ¥101.37-85/U.S.$ 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?How to get the ans -1,874 basis points? pls explain with steps shown clearly Spot exchange rate (AUD/USD) 1.7624/1.7864 Six- month expected spot rate (AUD/USD) 1.4880/1.5120; Australian six-month interest rate 4.55/5.05% pa US six-month interest rate 1.18/1.68% pa Calculate the precise outward uncovered margin from an Australian perspective.QUESTION 9 The current spot rate of the US $ against the UK £ is $1.310 to £1. Inflation rates for the next year are expected to be 2% in the US and 3% in the UK. Using the purchasing power parity theory calculate the dollar exchange rate in one years' time. O A. 1.297 ОВ. 1.310 OC. 1.322 OD. 1.280 O E. 1.340
- 1-The current spot exchange rate is $1.55/€ and the three-month forward rate is $1.50/€. You enter into a short three-month position on €1,000. At maturity, the spot exchange rate is $1.60/€. How much money have you made or lost? Made $150 Lost $100 Made €100 Lost $50Problem 1. A currency trader has compiled the following currency quotes: USD/EUR ($/Euro USD/GBP ($/£) JPY/USD (Â¥) Spot rate $1.2139 $1.7730 115.674 6-month forward rate $1.2067 $1.7894 114.867 Which of the following statements regarding currencies is CORRECT? A) The pound is strong relative to the dollar and the dollar is strong relative to the yen. B) The euro is strong relative to the dollar and the yen is weak relative to the dollar. C) The euro is weak relative to the dollar and the yen is strong relative to the dollar. D) The dollar is strong relative to the pound and the dollar is weak relative to the euro. Problem 2. Mary Beth Morgan and Shaban Shoshi are currency traders for Mercury Forex Inc. They have compiled the following information concerning currencies in Sweden (SEK), New Zealand (NZD), and United States (USD). SEK/USD USD/NZD Spot bid rate 7.8927 $0.6994 Spot ask rate 7.9021 $0.7000 3-month forward bid rate 7.8780 $0.7010 3-month forward ask rate…You observe the following quoted money market rates: Bid Ask Spot exchange rate AUD1.185/USD AUD1.189/USD 95-day Forward exchange rate AUD1.341/USD AUD1.349/USD 95-day USD interest rate 5.57% p.a. 6.38% p.a. 95-day AUD interest rate 7.71% p.a. 8.81% p.a. What will your profit (in USD) be 95 days from now if you borrow USD3 million today and invest in Australia and then convert back to USD? In your calculations assume 360 days per year. a. -USD 361,605.85 b. -USD 352,934.10 C. -USD 272,802.68 d. -USD322,300.31 e. None of the options in this question.