[Checkbox: 1, 2, 3, or 4 options may be needed to form the correct answer]. You operate in multiple countries with their own currencies. You can minimise your currency risk by: Switch your operations to only use one currency Buying futures (forward) contracts locking in the exchange rate Do a carry trade (borrow in one currency and invest in another) Exchanging funds when rates move in your favour Which of these takes into account the time value of money?" O Internal Rate of Return O Average rate of return Payback period Short term liabilities
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1.
![[Checkbox: 1, 2, 3, or 4 options may be needed to form the correct answer].
You operate in multiple countries with their own currencies. You can
minimise your currency risk by:
Switch your operations to only use one currency
Buying futures (forward) contracts locking in the exchange rate
Do a carry trade (borrow in one currency and invest in another)
Exchanging funds when rates move in your favour
Which of these takes into account the time value of money?"
Internal Rate of Return
O Average rate of return
Payback period
Short term liabilities](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F65d04f73-43cc-416f-a81c-ebcb74969758%2F409a10b8-63e4-4a69-a5df-c259a6482935%2F52fzgeh_processed.jpeg&w=3840&q=75)
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- Which of the following is/are TRUE with respect to spot market liquidity? I. The market liquidity improves if more buyers and sellers willing to participate in the currency trading. II. The spot markets for heavily traded currencies such as the Euro and Pound are very liquid. III. A currency's liquidity affects the ease with which an MNC can obtain or sell that currency. IV. If a currency is illiquid, an MNC is typically able to quickly purchase that currency at a reasonable exchange rate. A. I, II, III B. I, III, IV C. II, III, IV D. I, IIDescribe how foreign exchange transactions using futures would differ from those using forward exchange contracts. Hint: the bank always makes a profit on forex, by taking more of one currency in the exchange transaction and giving less of the other currency to the customer.Match macroprudential instruments with the types of measures. (you can also write down the matches in your answers, no need to fill in the blanks below!) Liquidity-Related Macroprudential Instruments/Types Limits on Net Open Currency Positions/Currency Mismatch Caps on Foreign Currency Lending Time-Varying/ Dynamic Provisioning Restrictions on Profit Credit-Related Capital-Related Distribution Caps on the LTV
- 1. Rate at which a foreign exchange dealer converts one currency into another currency on a particular day with maximum settlement of 2 days. a. forward rate b. future forwards rate c. spot rate 2. Risk of losing a market due to forex change. a. economic risk b. market risk c. transaction risk 3. Which of the following is NOT true about private placement? a. A private placement need to be registered with SEC b. Pension funds, insurance companies are the usual investors of portfolio issued under private placement c. The company still need to disclose financial data to convince investorsFor the statements below indicate if it is true or false. If the statement is false, rewrite so that it is a true statement. Use the space available to answer your question. 1. Foreign exchange markets are markets in which people of one country exchange goods with people from another country. TRUE/False: 2. When the actual foreign exchange rate for the dollar is greater than the equilibrium rate, the dollar is undervalued, meaning that it will buy less in international trade than it will buy at home. TRUE/False : 3. For any given interest rate, the shorter the time period before the receipt a dollar, the lower is its present value. TRUE/False :based on current Central Bank interest rate differentials, the best carry trade out of this list below is Note: This question requires to find out what current interest rates are for these countries Select one: O a. short USDZAR O b. short GBPUSD O c. long USDCHF O d. long USDTHB Carry trading is sometimes described as "picking up pennies in front of a steamroller", this is because Select one: O a. It doesn't work O b. whilst you tend to make small gains, every now and then you make a very large loss it involves very fast (high frequency) trading O d. whilst you tend to make small losses, every now and then you make a very large gain
- How can we obtain a pay-domestic-floating, receive-foreign-fixed currency swap by using a pay-domestic-fixed, receive-foreign-fixed currency swap and an appropriate interest rate swap? Given the following American put option prices and current underlying share price of $304.75, check to see whether the given put options violate the lower bound condition. Where you detect a violation, devise an arbitrage strategy that will yield a positive cash flow now with zero possible cash flows in the future. Strike Put price 300 7.75 305 8.15 310 8.5 315 9.055. The second currency named in an FX quote is called the: A. basis currency B. base currency C. unit currency D. quote or counter currency 6. A difference arises between the bid and ask rates of foreign currency because: A. the rates are between different dealer banks B. of arbitrage opportunities between currencies C. foreign exchange dealers need to earn income D. it takes time to find buyers or sellers of foreign currencyForeign exchange risk may be best defined as:a. the chance of value change in foreign exchange ratesb. the chance that the demand for your currency will dropc. the chance that exchange rates will be fixedd. the political risk posed by foreign governments
- Indian interest rates are normally substantially higher than U.S. interest rates. Assuming that interest rate parity exists, do you think hedging with a forward rate will be beneficial if the spot rate of the Indian rupee is expected to decline slightly over time? Will hedging with a money market hedge be beneficial if the spot rate of the Indian rupee is expected to decline slightly over time (assume zero transaction costs)? What are some limitations on using currency futures or options that may make it difficult for you to perfectly hedge against exchange rate risk over the next year or so?Choose a,b,c,d,e for the following: Question 10 - Which of the following is true? a. An indirect quote is the foreign currency price of the foreign country. b. A forward contract prevents upside gain. c. Gilt arises out of an action you cannot tell your parents about. d. If the market rate exceeds the cross rate, no-arbitrage is possible. e. The violation of interest rate parity motivates the activation of triangular arbitrage.Which of the following statements are true about exchange rate risk? Check all that apply: A Canadian investor with an investment in U.S Treasury bills faces exchange rate risk. Exchange rate risk arises from the uncertainty in asset returns due to changes in the exchange rate between the currency of the investor and the foreign currency. Exchange rate risk can't be perfectly hedged, even if the return earned in the foreign currency is known beforehand. Exchange rate risk can be hedged using a futures or forward contract in foreign exchange. Submit