1) Suppose the current spot rate is 100 Japanese Yen to 1 US dollar. You expect the spot rate in 30 days to be 98 Yen to the US dollar. Furthermore, (at an annualized rate) you can borrow US dollars at 5.2% and lend them at 5.0% and you can borrow the Japanese Yen at 5.7% and lend them at 5.5%. You can borrow or lend or lend USD
International Finance: 6 Multiple choice Questions on currencies, interest rate parity, effective interest rate, premium/ discount, hedging its exchange rate exposure, spot exchange rate, forward market
10. In the spot market $1 U.S. equals 1.85 Brazilian real, and in the 1-year forward market 1 U.S. dollar equals 1.98 real. Interest rates on 1-year, risk-free securities are 4.8 percent in the United States. If interest rate parity holds, what is the interest rate on 1-year, risk-free Brazilian securities? a. 2.13% b. 12.14
Obtain the latest annual report and accounts of a company of your choice.* Consult the Balance Sheet and determine the company's net asset value. · What is the composition of the assets, i.e. the relative size of fixed and current assets? · What is the relative size of intangible fixed and tangible fixed assets? · What p
What would be the best strategic approach, to do a joint-venture business in the following countries? Japan Pakistan Australia I am about to launch a new business into these three countries and need to know the best way to approach them as a partner.
21/5. Differentiate between the spot exchange rate and the forward exchange rate.
Explain why corporations engage in swap-driven financing, and discuss the defining features of an interest rate and a currency swap. Why might a corporation prefer one type of swap contract over another?
Assess the benefits and costs of using swap arrangements with financial futures contracts as a tool for managing the companies risk.
Before the Asian currency crisis, the Malaysian ringgit (RM) traded at about RM2.5000/$. In the initial crissis, the ringgit depreiciated about to above RM4.000/$. On Sept. 1, 1998, 14 months after the crisis began, the Malaysian government introduced exchange controls intended to reduce the internationalization of the ringgit.
The spot exchange rate for the euro is $1.6750/euro on Jan 1, 2003. A U.S. investor bought euro1,000,000 on Jan 1 and sold it six months later (june 1). A German investor bought $1,000,000 on Jan 1 and sold it six months later (june1). What should the $/euro rate have been on June 1 for the UK investor to make the same prof
A dealer in Australia quotes A$1.7430-40/$, A dealer in Paris quotes $0.8610-20/euro. A dealer in Germany quotes euro 0.6667-76/A$. What should the German dealer quote to prevent any arbitrage?
You are negotiating the purchase of textile machinery either from a German supplier or a Japanese supplier. The German supplier is prepared to sell you fully automated looms at a price of 20,000 Euros per loom. Payment will be made in Euros at the time of delivery, which is promised for one month hence. The Japanese supplier wou
Please be as detailed as possible: A) Define foreign exchange exposure for a firm. Is a purely domestic firm subject to some foreign exchange exposure? If yes, why? B) What are the key differences among economic exposure, transaction exposure, and translation exposure?