Assume that interest rate parity holds and that 90-day risk-free securities yield 6% in the United States and 6.6% in Germany. In the spot market, 1 euro equals $1.31. What is the 90-day forward rate? Do not round intermediate calculations. Round your answer to four decimal places. Is the 90-day forward rate trading at a premium or discount relative to the spot rate?
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- Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.00905, while in the 90-day forward market 1 Japanese yen = $0.00913. In Japan, 90-day risk-free securities yield 1%. What is the yield on 90-day risk-free securities in the United States? Do not round intermediate calculations. Round your answer to two decimal places.Interest Rate Parity Assume that interest rate parity holds and that 90-day risk-free securities yield 4% in the United States and 4.3% in Germany. In the spot market, 1 euro equals $1.36. What is the 90-day forward rate? Do not round intermediate calculations. Round your answer to four decimal places. Is the 90-day forward rate trading at a premium or discount relative to the spot rate? The 90-day forward rate is trading at a premium relative to the spot rate.Quantitative Problem: Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.008, while in the 180-day forward market 1 Japanese yen = $0.0088. 180-day risk-free securities yield 1.05% in Japan. What is the yield on 180-day risk-free securities in the United States? Do not round intermediate calculations. Round your answer to two decimal places. %
- Assume that interest rate parity holds and that the 90-day risk-free securities yield is 5% in the United States and 5.3% in Germany. In the spot market, 1 euro equals $1.40 (1.4 dollars per euro). What is the 90-day forward rate? rh 1.25% 5.0% rf 1.33% 5.3% Euro 0.7143 $1.40 Spot Rate Forward Rate 1.943396 Is the 90-day forward rate trading at a premium or a discount relative to the spot rate?Assume that interest rate parity holds and that 90-day risk-freesecurities yield a nominal annual rate of 3% in the United States and a nominal annual rateof 3.5% in the United Kingdom. In the spot market, 1 pound = $1.29.a. What is the 90-day forward rate?b. Is the 90-day forward rate trading at a premium or a discount relative to the spot rate?Assume that interest rate parity holds. In both the spot market and the 90-day forward market, 1 Japanese yen equals 0.0088 dollar. In Japan, 90-day risk-free securities yield 4.4%. What is the yield on 90-day risk-free securities in the United States? Do not round intermediate calculations. Round your answer to two decimal places.
- Assume the following information is available for the United States and Europe: Nominal interest rate Expected inflation Spot rate One-year forward rate a. Does IRP hold? IRP -Select- $ U.S. 4% 2% $ in this case. b. According to PPP, what is the expected spot rate of the euro in one year? Do not round intermediate calculations. Round your answer to three decimal places. EUROPE 6% 5% $1.13 $1.10 c. According to the IFE, what is the expected spot rate of the euro in one year? Do not round intermediate calculations. Round your answer to three decimal places. d. Reconcile your answers to parts (a) and (c). Parts a and c combined say that the forward rate premium or discount is [-Select- of the euro. ✓the expected percentage appreciation or depreciationAssuming that interest rate parity holds. In both the spot market and the 90 day forward market, 1 Japanese ye equals .0089 dollar. In Japan, 90-day risk free securities yield 4.3%. What is the yield on 90-day risk free securities in the US? Do not round intermediate calculations. Round your answer to two decimals places.In a market with an unchanged current exchange rate where the interest parity condition holds, if investors now expect the exchange rate to be 6.25% lower a year from now, the return on foreign bonds with an interest rate of 5.75%would be ____enter your response here%. (Enter your response rounded to two decimal places.)
- Q5 If the 60-day interest rates (simple, p.a.) are 3% at home (usd) and 4% abroad (eur) and the spot rate moves from 1.000 to 1.001.(a) What is the actual change in the forward rate? (b) What is the predicted change in the swap rate computed from the return differential?(c) What is the actual change in the swap rate?5. If the 60-day interest rates (simple, p.a.) are 3% at home (usd) and 4% abroad (eur) and thespot rate moves from 1.000 to 1.001:(a) What is the return differential, and what is the corresponding prediction of the change in the forward rate? (b) What is the actual change in the forward rate?(c) What is the predicted change in the swap rate computed from the return differential?(d) What is the actual change in the swap 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.