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# Foreign Exchange Rates

### Covered Interest Arbitrage in Both Directions

Covered Interest for New Zealand (NZs) and US dollars. The one-year interest rate in New Zealand is 6%. The one-year interest rate in US is 10% The spot rate of the New Zealand dollar (NZs) is \$.50 The forward rate of the New Zealand dollar is \$.54 Is covered interest arbitrage feasible for U

### Foreign Exchange Derivatives

Managers in multinational corporations use derivatives to hedge their exposure to currency risk. Therefore, they must understand different forms of currency derivatives and how the derivatives markets work. How foreign exchange derivatives markets work. Explain the role of derivatives in hedging the foreign currency risk.

### Exchange Rates and the Time Value of Money

39. The exchange rate between the pound sterling and the dollar is currently \$1.50 per pound, the dollar interest rate is 7% per year, and the pound interest rate is 9% per year. You have \$100,000 in a one-year account that allows you to choose between either currency, and it pays the corresponding interest rate. a. If you ex

### Speculating on Anticipated Exchange Rates

Citi Bank expects that the Singapore dollar will depreciate against the dollar from its spot rate of \$.43 to \$.42 in 60 days. The following interbank lending and borrowing rates exist: Currency Lending Rate Borrowing Rate US Dollar 7.0% 7.2% Singapore 22.0%

### Determining and Forecasting the Exchange Rates.

Please see attachment. 1. Two countries, the United States and England, produce only one good, wheat. Suppose the price of wheat is \$3.25 in the United States and is 1.35 pounds in England. a. According to the law of one price, what should the \$: Pound spot exchange rate be? b. Suppose the price of wheat over the n

### International Business Currency Questions - the Swiss franc (SF) and the U.S. dollar (\$).

Please see attachment. I need help answering the questions and calculations. 1. The foreign exchange quotations shown below are for the Swiss franc (SF) and the U.S. dollar (\$). U.S. Dollar Equivalent Currency per U.S. Dollar Wednesday Tuesday Wednesday Tuesday Bid Ask Bid Ask Bid Ask Bid Ask Spot 0.6506

### Bank USA recently purchased \$10 million worth of euro-denominated one-year CDs that pay 10 percent interest annually.

1. Bank USA recently purchased \$10 million worth of euro-denominated one-year CDs that pay 10 percent interest annually. The current spot rate was 1.30/\$. b. Is Bank USA exposed to an appreciation or depreciation of the dollar relative to the euro? c. What will be the return on the one-year CD if the dollar appreciates relati

### We can not forecast the long-range value of one currency in terms of another with great accuracy, but we can often predict the trend.

Can you give me some thoughts/pointers on what this lecture is talking about? ====================================================================== In an earlier note I shared some thought on business in the international environment. An important, and challenging, aspect of that is dealing with multiple currencies and the

### Analyze the role of the foreign exchange market in facilitating the global trading positions in India and Japan.

Need help writing a 300 word paper analyzing the role of the foreign exchange market in facilitating the global trading positions in India and Japan.

### Because fluctuating currency rates are an important aspect of international dealings, knowing how foreign exchange markets function will help ensure your success in the international business market.

Please help me with the following: Because fluctuating currency rates are an important aspect of international dealings, knowing how foreign exchange markets function will help ensure your success in the international business market. Consider this scenario You have been asked by a local college to write a lecture that exp

### International Finance - Fresh Juices, Inc

Scenario: As a senior financial analyst for Fresh Juices, Inc., the largest fresh fruit drink company in the United States, you are a key player in corporate finance for the business. You are consulted on major capital projects, prepare analysis for executive officers, present material at senior management meetings, and pla

### Swenser Corporation - What is the effective interest rate on the foreign loan?

Swenser Corporation arranged a two-year, \$1,000,000 loan to fund a foreign project. The loan is denominated in Mexican Pesos, carries a 10% nominal rate, and requires equal semi-annual payments. The exchange rate at the time of the loan was 5.75 pesos per dollar but immediately dropped to 5.10 pesos per dollar before the first

### How do multilateral and regional financial institutions promote global business?

A) How do multilateral and regional financial institutions promote global business? B) How do global companies protect themselves against foreign exchange risk and other financial risks? C) What are some benefits of sourcing an organization's financing in foreign markets?

### Examples of Foreign Currency Translations

This formatted MS Word file contains examples of foreign currency translations for Brisco Bricks and its foreign supplier, Bolivian Clay.

### Foreign Currency Transaction

On November 15, 2003, Chow Inc., a U.S. company, ordered merchandise FOB shipping point from a German company for 200,000 euros. The merchandise was shipped and invoiced on December 10, 2003. Chow paid the invoice on January 10, 2004. The spot rates for euros on the respective dates were: November 15, 2003 \$.4955 December 10

### Exchange Rates Explanation

Chapter 23 (Quiz 1) 1. Exchange rates. Use table below for the problems a. How many euros can you buy for \$100? How many dollars can you buy for 100 euros? b. How many Swiss francs can you buy for \$100? How many dollars can you buy for 100 Swiss francs? c. If the euro depreciates with respect to the dollar, will the

### Triangular Arbitrage Problem

Assume the following information Value of Canadian dollar in U.S. dollars \$.90 Value of New Zealand dollar in U.S. dollars \$.30 Value of Canadian dollar in New Zealand dollars NZ\$3.02 Given this information , is triangular arbitrage possible? If so, explain the steps that would relect triangular arbitrage, and compute t

### Financial Statement Reporting and Disclosures

See the attached file. Indicate how each of the following items would be recognized in a company's financial statements for 2007, and what elements would be recognized. If no elements are to be recognized, note this in the answer. For each item, conceptually justify why the elements are to be recognized or why none should be

### International Finance - Purchasing Power

You are the treasurer of a U.S. multinational corporation with a subsidiary in Spain and you are concerned about the purchasing power of the Spanish peseta. a. Your expatriates in Spain tell you that the McDonald's Big Mac costs Pta375. You know that the Big Mac costs \$2.43 in the United States. Given this information, what i

### Euro vs dollar

Explain the exchange rate determination between euro and dollar. Determine money supply between euro and dollar Explain in context appreciation and depreciation for euro and dollar Show graphically.

### Exporting and Currency

Why is an exporter that is to be paid in six months in a foreign currency worried about fluctuating foreign exchange rates? Are there ways in which this exporter can protect itself? If so, what are they? How does the credit or money market hedge work? Why is acceleration or delay of payments more useful to an IC than to small

### Covered Interest Arbitrage

7. Covered Interest Arbitrage (CIA) 7. Covered Interest Arbitrage (CIA) Given the following: US 90-day interest rate 5% Canadian 90-day interest rate 10% Current Spot Rate \$0.8512/C\$ 90-day Forward Rate \$0.8501/C\$ You have \$1 Million and would like to engage in CIA: i.) Outline the steps for CIA with the approp

### Spot Exchange Rate, forwards, finance

3. The Bid price of Euro is \$1.41075 / Euro and the Ask Price is \$1.42076/Euro. a. What is the Bid-Ask % Spread? b. If you have \$1,000 how many Euros you will get? (You are buying Euros here) c. If you have Euro 1000, how many US dollars, you will receive? (You are selling Euros here)

### Country Risk Analysis

Please use India to write an initial country risk analysis. Discuss each of the following: a. Economic exposure b. Translation exposure c. Transaction exposure d. Political e. Socio-economic f. Environmental What are some procedures and techniques that can be used to mitigate the risks? U

### Subjects in foreign currencies, derivatives, forward contracts, and options.

How are foreign currency derivatives, such as forward contracts and options, reported on the balance sheet?

### Fed Rates

The Fed just drop in interest rates in the US. What does this mean to a foreigner holding dollars? I guess another way to look at is what are the implications in terms of foreign exchange rates and capital flows?

### Foreign Exchange Translation

P12-17 Translation, Journal Entries, Consolidated Comprehensive Income, and Stockholders' Equity On January 1, 20X5, Taft Company acquired all of the outstanding stock of Vikix, Inc., a Norwegian company at a cost of \$151,200. Vikix's net assets on the date of acquisition were 700,000 kroner (NKr). On January 1, 20X5, the b

### Why is an exporter worried about fluctuating foreign exchange rates?

1. Why is an exporter that is to be paid in six months in a foreign currency worried about fluctuating foreign exchange rates? 2. Are there ways in which this exporter can protect itself? If so, what are they? 3. How does the credit or money market hedge work? 4. Why is acceleration or delay of payments more useful to a

### Hedging/Mergers/Acquisitions

What factors contribute to the fluctuation of exchange rates? Discuss. What is the best way for a multinational corporation to hedge against foreign currency risk? What are some differences between hedging and forward contracts? What is an example of a recent merger or acquisition in the service industry or western geograp

### International financial management challenges

What additional challenges arise in international financial management? What factors cause currencies to differ in value from one another? How do currency fluctuations affect earnings of multinational corporations?