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- When you logged on to your brokerage account this morning, you saw that the Brazil Real is trading at 50.2970. Gold is trading at $200 per ounce. You have $10,000 to invest, and you think you might be able to make arbitrage profits in the gold market. How many Reals could you buy at the posted price? How much gold could you buy at the dollar price in the gold market? What would the gold be worth if the Real price is 750 BRL per ounce? If the Real price for gold is 750 BRL per ounce, how would you make arbitrage profits? How much would you make with your $10,000 investment?Suppose you purchase a bank accepted bill with a face value of $100,000. It has 120 days to maturity and is trading at an interest rate of 8% pa. 1.1 What was the purchase price today (Day 0)? 1.2 Suppose you sell the BAB 30 days later. What was the sale price, if the interest rate was 8.0%? 1.3 (Still assuming 30 days later) What was the sale price if the interest rate was 7.5%?NewBank decides to invest $45 million in 30-day T-bills. The T-bills are currently trading at $4,986.70 (including commissions) for a $5,000 face value instrument. What does the balance sheet look like?
- Citibank quotes NZ$1 = US$ 0.6624. Deutsche Bank quotes € 1 = US$1.1758.BNZ Bank quotes€ 1 = NZ$1.7762.a. If these quotes are simultaneously observed spot rates, can you make an arbitrage profit? Ifso, calculate what profit would you make if you started with NZ$ 1 million. Assume thatthere are no transaction costs. b. What would be your arbitrage profit if you were to incur total transaction costs of 0.1% of theamount used for conversions?How much profit or loss would you experience if you purchased a $1,255,640 face value bank bill with 97 days to maturity at a yield of 0.88% and sold it 22 days later at a yield of 1.01%?AAB Bank holds $100 in bank capital and $100 in securities, and then takes in $600 in deposits. It keeps 10 percent of deposits in reserve. It uses the rest of its reserves to make bank loans. a. Explain the balance sheet (T-account) for AAB Bank. b. What is AAB Bank's leverage ratio? c. Suppose that 10 percent of the borrowers from AAB Bank default and these bank loans become worthless. How does the bank's new balance sheet look? d. By what percentage do the bank's total assets decline? By what percentage does the bank's total capital decline? Which change is larger? Why? Is the bank still solvent and why?
- The table below shows balance sheet data, in £m, for a phone-based bank, Android Bank: £m loans to corporati ons 50 loans to households 600 300 AndroidBank's holdings of shares and bonds, etc retail current account deposits (deposits by general public with AndroidBank) commercial current account deposits (deposits by companies with AndroidBank) tangible assets and property 1500 50 500 cash in vaults 50 reserve deposits with Bank of England (deposits by AndroidBank) borrowing by AndroidBank in money market 300 25Consider a bank with the following balance sheet (M means million): (Image attached as Q3) If the interest rates go up by 1%, using the duration and convexity rule, determine the net worth of the bank and the equity to asset ratio. ALSO In above scenario, to maintain the equity to asset ratio at 40% which is required by the regulation, the bank decides to raise cash (zero duration and zero convexity) from the equity holders. How much cash does the bank need to raise? Attempted to create formula for first part - is it correct?Consider a bank with the following balance sheet (M means million): (Image attached as Q3) If the interest rates go up by 1%, using the duration and convexity rule, determine the net worth of the bank and the equity to asset ratio. ALSO In above scenario, to maintain the equity to asset ratio at 40% which is required by the regulation, the bank decides to raise cash (zero duration and zero convexity) from the equity holders. How much cash does the bank need to raise?
- An investment bank sells securities under a repurchase agreement for $800.438 million and buys them back in 7 days for $800.568 million. What is the repo's single payment yield?Report your answer in % to the nearest 0.01%;We have the following information about a bank's balance sheet. Rate sensitive assets = $10,000,000 Fixed-rate assets = $20,000,000 Rate sensitive liabilities = $4,000,000 Fixed-rate liabilities = $26,000,000 Let's do a simple gap analysis. If the interest rate falls by 5 percent, O a. The bank will lose $300,000. O b. The bank will lose $500,000. O c. The bank will lose $200,000. O d. The bank will gain $300,000. O e. The bank will gain $200,000.Suppose a bank has the following Balance Sheet Assets Liabilities RSA = 120 RSL = 90 FRL = X FRA = 110 (Fixed rate liabilities can be found if needed by determining what number it must be to balance the balance sheet.) Suppose all the Assets and Liabilities were set last year when the interest rate was 10, if the interest rate has changed by 2% since that time what is the current cost from all of the bank's liabilities? Your Answer: