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# Finance study questions: Currency; Forward Discount/Premium; Differential; Inflation and more...

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Please see attachment for 16 questions: some short answer, some long. Please identify variables and provide clear explanations to study questions. These are samples I will be studying from.

** See ATTACHED file(s) for complete details **

3.7. Assume Poland's currency (the zloty) is worth \$.17 and the Japanese yen is worth \$.008. What is the cross rate of the zloty with respect to yen? That is, how many yen equal a zloty?

3.17. Compute the forward discount or premium for the British pound whose 180 day forward rate is \$1.75 and spot rate is \$1.78. State whether your answer is a discount or premium.

4.12 Blue Demon Bank expects that the Chinese currency (the yuan) will depreciate against the dollar from its spot rate of \$.15 to \$.14 in 10 days. The following interbank lending and borrowing rates exist ... (see attachment)

Assume that Blue Demon Bank has a borrowing capacity of either \$10 million or 70 million yuan in the interbank market, depending on which currency it wants to borrow.

a) How could Blue Demon Bank attempt to capitalize on its expectations without using deposited funds? Estimate the profits that could be generated from this strategy.
b) Assume all the preceding information with this exception: Blue Demon Bank expects the yuan to appreciate from its present spot rate of \$.15 to \$.17 in 30 days. How could it attempt to capitalize on its expectations without using deposited funds? Estimate the profits that could be generated from this strategy.

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