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Foreign Exchange Rates

Exchange rates

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

Balance Sheet Analysis

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

2 paragraphs each

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.

Swap-driven financing

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?

Money exchange rate

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.

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

Cross-exchange rates

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?

International finance: hedging using forward market and money market hedges

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