Assume you are in India and borrowed 800,000 Rs from one of your friends who lives in Australia. Suppose the spot exchange rate at the time borrowing was Rs63/$ and you promised to repay the loan after six months with a forward currency rate of Rs68/$ without any interest. Required: a) What is the amount of money in dollars that your friend needs pay to an authorised currency exchanger in Australia with a 20$ administration fee to transfer the loan?
Q: AMD needs $50 million for 1 year to finance its working capital. The company has two borrowing…
A: If the amount is borrowed in Eurodollars, interest amount is computed as follows:…
Q: XYZ Corporation, located in the United States, has an accounts payable obligation of ¥1500 million…
A: Money Market Hedge - It refers to the method under which a company's domestic currency is locked in…
Q: Suppose an investor invests in a savings account in England one year ago. At the time of…
A: in this case investor return is effected by change in exchange rate
Q: Assume you are in India and borrowed 800,000 Rs from one of your friends who lives in Australia.…
A: Given, Amount borrower = 800000INR Home currency = Indian INR Foreign Currency = Australian $ Spot…
Q: Assume you are in India and borrowed 800,000 Rs from one of your friends who lives in Australia.…
A: The question is related to forex management. The details are given below.
Q: Lee Junho who is a currency trader in Japan observers the following market conditions: • Annual…
A: Covered interest arbitrage is an arbitrage strategy where an investor hedges against exchange rate…
Q: er annum in the U.S. and 5.7% per annum in the U.K. Assume that you can borrow £1,000,000 or its…
A: In monetary terms, the exchange rate (also known as the foreign exchange rate, forex rate, or rate)…
Q: Cecilia who is a currency trader in Japan observes the following market conditions: • Annual…
A: Theoretical Forward rate = Current Spot Exchange rate x (1+Interest rate in Home…
Q: BL lives in the US and has $800,000 surplus funds that he wants to invest for one year in any…
A: a.) Covered interest arbitrage is an arbitration trading strategy whereby an investor capitalises on…
Q: n investor has
A: Given information : Amount available for investment $2,000,000 US interest rate 2% German…
Q: If Bank A quotes you an exchange rate of $1.05 per pound. The same bank also quotes exchange rates…
A: Quoted exchange rate = $1.05 per pound Other quoted exchange rates: 1 Yen = $0.97 1 Yen = 0.70 pound
Q: What are spot rates and forward rates? Suppose you open the newspaper today and observe the…
A: Answer 1:The correct answer is “discount” in the forward market.Justification: This is because of…
Q: Andrew has been an astute investor. He has set aside ksh 10 million to be invested in USA at a rate…
A:
Q: Good day, How should I resolve this question, please? Your friend from Australia purchased a…
A: Current exchange rate = C$1 = A$1.0227 Value of computer = C$3,900 In Australian dollars, value of…
Q: Assume that Riverside Corp. from the United States will receive 400,000 pounds in 180 days. The…
A: Solution : Money Market Hedge is that technique which provide the protection against loss which…
Q: Suppose one-year German Treasury bill pays 4.2% and one-year Canadian Treasury bill pays 2.94%. The…
A: Arbitrage profit is generated by buying and selling the same assets or portfolio at different prices…
Q: XYZ entered into a currency swap with its bank, and borrowed $10 million at 9% and swaps for a 11%…
A: Currency swap refers to a swap arrangement in which an investor agrees to exchange 1 currency into…
Q: You often travel to Japan and Australia and you need to exchange Japanese and Australian currencies.…
A: The Foreign Exchange rate is the exchange rate at which one country's currency exchanges with…
Q: Tony Fernandes, a foreign exchange trader in Canada, has CAD. 4,000,000 for short-term money market…
A: Computation of Fair Forward Rate of JYP/CAD: 6 month Fair Forward Rate of JYP/CAD=Spot JYP/CAD *( 1…
Q: A U.S. bank converted $6 million to Swiss francs to make a Swiss franc loan to a valued corporate…
A: Amount In Swiss franc =Amount in USD * Exchange rate on loan date = 6,000,000*1.153 = 6918000
Q: What is the rate of return to the Swiss investor?
A: The Swiss francs paid at the time of purchase of the treasury bill is:
Q: Read the following case and answer the question that follows. Welles Fargo Bank, based in Los…
A: Different currencies are available at different rates and banks can utilize to earn profit on that.
Q: Assume you are in India and borrowed 800,000 Rs from one of your friends who lives in Australia.…
A:
Q: JJ Fashion Wholesalers Ltd, an Indian clothing manufacturer, has a contract to purchase cotton from…
A: Exchange rate quotations are basically the rate at which two different country's currency can be…
Q: IBM purchased computer chips from Toshiba, a Japanese electronics concern, and was billed ¥250…
A: Given details: IBM has ¥250 million payable in 3 months from now Current spot rate is 1$ = ¥105 3…
Q: A year ago, a Swiss investor bought a 1-year U.S. Treasury security at a price of $9,708.74, with a…
A: Here is the approach adopted:The computation of the Rate of return is done as:
Q: As a foreign exchange trader at a Citibank, you are given the following quotations: 1-month 2-month…
A: Data given: Spot rate: 1S$ = RM 3.0500 /10 1 month forward 1S$ = RM 3.20 - 3.70 1S$ = Bid Rate…
Q: Suppose one-year German Treasury bill pays 4.13% and one-year Canadian Treasury bill pays 2.95%. The…
A: German treasury bill pays interest at 4.13% whereas Canadian treasury bill pays 2.95%. According to…
Q: Assume you are an exporter and you want to sell USD that you have received as export remittance. The…
A: Answer: The selling rate of 1 USD is INR 1/65.12
Q: Suppose that the treasurer of IBM has an extra cash reserve of $400,000 to invest for six months.…
A: Given information, Interest rate (I$)=4.3/2 =2.15% Interest rate (I€)= 3.2/2 =1.6% Spot exchange…
Q: foreign exchange trader in Canada, has CAD. 4,000,000 for short-term money market investment and…
A: There are arbitrage opportunities available in market due to differences in spot rate and forward…
Q: investor has $2m to invest and has the option of placing it in a us bank account paying 2% annually,…
A:
Q: Assume that a UK family visits Spain every summer. Last year, the hotel room where they stayed was…
A: "Hi, Thanks for the Question. Since you asked multiple sub parts question, we will answer first…
Q: suppose you purchased a 10 million one-year Australian dollar loan that pays 7 percent interest…
A: Value in Australian dollar = AUD 10,000,000 Interest rate = 7% Spot rate per AUD = USD 0.820
Q: Suppose that the current spot exchange rate is €0.830/S and the three-month forward exchange rate is…
A: Covered interest arbitrage is an arbitrage trading strategy used by an investor to capitalize on the…
Q: AnswerUS dollars after the arbitrage.
A: Given exchange rate quotation:- S$1 = $0.60£1 = $1.50£1 = S$2.60 The arbitrageur in order to…
Q: You are the CEO of a Mexican company that took out a dollar-denominate loan from an American bank…
A: Exchange rate of 10 pesos per dollar means the amount borrowed (in pesos) was = $100,000 * 10 =…
Q: Jack Ma, a foreign exchange trader in Canada, has CAD. 4,000,000 for short-term money market…
A: Theoretical Forward rate = Current Spot rate x (1+Home Currency Interest rate)(1+Foreign Currency…
Q: Emily Karlsen is a currency trader in Sydney and has 1 million Australian dollar (or the U.S. dollar…
A: Forward rate in terms of units of foreign currency per unit of home currency With spot exchange rate…
Q: We are a car dealership in NOLA. We will import Japanese Cars (Suzuki) for JPY 200,000,000 We will…
A: Transactions for hedging 1) Pay 20 Million JPY in 3 months - Foreign exchange risk involved 2)…
Q: You live in the United States and want to try to make some money through interest rate arbitrage…
A: Foreign Exchange Market is that under which we were trading in Foreign Currency we can make the…
Assume you are in India and borrowed 800,000 Rs from one of your friends who lives in Australia. Suppose the spot exchange rate at the time borrowing was Rs63/$ and you promised to repay the loan after six months with a forward currency rate of Rs68/$ without any interest.
Required:
a) What is the amount of money in dollars that your friend needs pay to an authorised currency exchanger in Australia with a 20$ administration fee to transfer the loan?
Step by step
Solved in 3 steps
- Assume you are in India and borrowed 800,000 Rs from one of your friends who lives in Australia. Suppose the spot exchange rate at the time borrowing was Rs63/$ and you promised to repay the loan after six months with a forward currency rate of Rs68/$ without any interest. Required: a) What is the amount of money in dollars that your friend needs pay to an authorised currency exchanger in Australia with a 20$ administration fee to transfer the loan? b) If you are planning to settle the loan amount in dollars (the amount calculated in a.), what is the amount of money in rupees (Rs) that you need to pay to an authorised currency exchanger in India after six months with a Rs 500 administration fee? c) What is the total cost of your loan and present your answer as a rate of interest per annum.Assume you are in India and borrowed 800,000 Rs from one of your friends who lives in Australia. Suppose the spot exchange rate at the time borrowing was Rs63/$ and you promised to repay the loan after six months with a forward currency rate of Rs68/$ without any interest. Required: b) If you are planning to settle the loan amount in dollars (the amount calculated in a.), what is the amount of money in rupees (Rs) that you need to pay to an authorised currency exchanger in India after six months with a Rs 500 administration fee?Assume you are in India and borrowed 800,000 Rs from one of your friends who lives in Australia. Suppose the spot exchange rate at the time borrowing was Rs63/$ and you promised to repay the loan after six months with a forward currency rate of Rs68/$ without any interest. Required: b) If you are planning to settle the loan amount in dollars (the amount calculated in a.), what is the amount of money in rupees (Rs) that you need to pay to an authorised currency exchanger in India after six months with a Rs 500 administration fee? c) What is the total cost of your loan and present your answer as a rate of interest per annum
- Assume you are in India and borrowed 800,000 Rs from one of your friends who lives in Australia. Suppose the spot exchange rate at the time borrowing was Rs63/$ and you promised to repay the loan after six months with a forward currency rate of Rs68/$ without any interest. Required: c) What is the total cost of your loan and present your answer as a rate of interest per annumGiven we have 100,000 EUR in an EU bank account we consider the below options: "A" - to deposit the money today in a special savings account in the local bank at the current interest rate at r= 1% for one year. • "B" - to convert the amount into the USD if today's exchange rate is E, is €1/$1, transfer and deposit the money in a USA bank at the going interest rate there at r* = 5% for one year. Make an agreement today to convert and return a specified amount of US $ to € one year from today based on the forward exchange rate (F ) of €1.25/$1. The forward exchange contract can be signed today to eliminate any uncertainty. Which of the two is better?I would appreciate it if this was done in excel please A US bank converts $ 1 million to SF to make an SF loan to a valued customer when the exchange rate was 1.53 SF per USD. The borrower agrees to repay the principal plus 6.25% interest in one year. The borrower repaid SF at loan maturity and when the loan was repaid the exchange rate was 1.63 SF per USD. What was the bank's dollar rate of return?
- You are travelling in Thailand and want to purchase a souvenir for ฿2000. The current exchange rate is 0.04221CAD per 1฿. Your credit card charges 1.5% on currency exchange. What will be the charge in CAD to your card?1) You are planning your dream vacation to see Komodo National Park in Indonesia. You figure you will need 76,405,080 Indonesian rupiah for the vacation, because you staying at the Ayana, and the exchange rate is Et = 18,630.84. How much $US dollars do you need to set aside? A) $4,101 B) $4,555 C) $5,244 D) $5,910 2) Say that in Marquette, Michigan you can buy a Big Mac for $7.6 on Washington Street, while at the Anfa Mall in Casablanca, Morocco, the same burger will set you back 43.2 Dirham. The current exchange rate is $1 US buys 5.1 Dirham. According to the law of one price, the exchange rate should be Et = ______ and overtime, we can predict that the US dollar should ______. A) 5.68; depreciate B) 5.68; appreciate C) 6.12; depreciate D) 6.12; appreciateYou often travel to Japan and Australia and you need to exchange Japanese and Australian currencies. Your bank provides the following quotes: Currency Bid Ask Japanese Yen (JPY) 105 JPY/USD 110 JPY/USD Australian Dollar (AUD) 0.65 USD/AUD 0.70 USD/AUD If you want to convert 5,000 AUD into JPY, how much JPY will you receive from the bank? (Pick the closest answer) A. 341,250 JPY B. 3,095 JPY C. 385,000 JPY D. None is correct.
- An investor has $2m to invest and has the option of placing it in a US bank account paying 2% annually, or in a German bank, where the annual rate of interest is only 2.5%. If the current exchange rate for the Euro is given as $1.4250, at what 1-year Dollar-Euro forward rate of exchange would the investor get the same return from investing in the US as he/she would by investing in Germany? Please show your work.Give typing answer with explanation and conclusion 1. You enter an NDF to buy UYU (Uruguayan Peso) for $.0363/UYU. The contract size is UYU50,000,000 and the contract matures in six months. If the spot rate is $.0381/UYU in six months, will you owe the bank money, or will the bank owe you money? How much in total? If the spot rate is $.0346/UYU in six months, will you owe the bank money, or will the bank owe you money? How much in total?Give typing answer with explanation and conclusion b) Mary recognises that an arbitrage opportunity exists and decides to borrow $1 million US dollars to purchase Japanese yen and sell 3-month forward to pay off US dollars denominated loan. Calculate the yen arbitrage profit from her strategy, using the data below and Japanese yen as the local currency. Show your calculations. [Hint: the strategy is for 3 months only]. Japanese Yen/US Dollar - spot currency exchange rate ¥124.30000/$1.00000 Japanese interest rate 0.50% US interest rate 3.50% Currency forward rate ¥123.26050/$1.00000