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- 1-The current spot exchange rate is $1.55/€ and the three-month forward rate is $1.50/€. You enter into a short three-month position on €1,000. At maturity, the spot exchange rate is $1.60/€. How much money have you made or lost? Made $150 Lost $100 Made €100 Lost $501) Assume the following exchange rates are indirect quotes, what are the equivalent direct quotes INDIRECT QUOTE DIRECT QUOTE $1=7.15 MXN (spot) ______________ $1=10.12 MXN (forward -30 day) ______________ $1=1.21 EUR _________.83_____ $1=120 JPY _________.0083_____ $1=1.7 CHF ___________.58___ 2) If you were comparing the price of hotel rooms in the above countries, the following would be the price in US dollars: 750 MXN (Spot) = _____________ 325 CHF = ________552.5_____ 650 EUR = _________786.5____ 40,000 JPY = ________4,800,000_____ 3) Suppose the Peso devalued by 15%, the hotel room in Mexico would now sell for __________Mexican Pesos which would equal ___________US dollars. 4) Suppose you exported something from Mexico to the US and were quoted a price (payable immediately) of 20,000 Pesos. What would your receipt in US dollars be? _____________. 5) Suppose you exported something from Mexico to the US and the payment…3. For currency transactions, the spot exchange rate is the rate _______, and the forward exchange rate is the rate _______. A. on that day; today B. at some specified future date; today C. today; on that date D. on that date; at some specified future date 4. The first currency mentioned in an FX quote is called the: A. basis currency B. base currency C. root currency D. terms currency
- € spot rate = 6-month forward rate = €1.20/£ Euro-zone interest rate = 3% p.a. U.K. interest rate = 2% p.a. What should the 6-month forward rate be if interest rate parity holds?The current USD/EUR exchange rate is [de] dollar per euro. The one-year forward exchange rate is [fe]. The one-year USD interest rate is [rus]% p.a. semiannually compounded. Estimate the one-year EUR interest rate (p.a. semiannually compounded, stated in percent). Inputs: de, fe, rus = 1.85, 1.75, 1.31 Tip: Use the CIPUsing the quotes from Exhibit 5.7, calculate the three-month forward cross-exchange rate for EUR/GBP (X.XXXX)
- 1. – Using the following information, determine each one of the theoretical Exchange Rates (E.R.) for December of year 02 according to the Relative PPP Theory. MARKET MARKET E.R. E.R. COUNTRY CURRENCY СРI CPI Dec-01 Dec-02 Dec-01 Dec-02 Mexico МХР 231.89 264.3546 19.56 20.15 Turkey TRY (Lira) 498 527.88 5.9419 6.07673 Australia AUD 989 1038.45 1.7759 1.81183 Japan JPY 678 745.8 105.866 113.978 United Kingdom GBP 905.26 986.7334 0.5991 0.617849 South Korea KRW (Won) 795.4 874.94 1,658.62 1,793.37 Canada CAD 523.12 554.5072 1.3736 1.4942 U.S.A. USD 1.5 1.56Match each term in Column A with its related definition in Column B. Column A 1. ____________ Spot rate 2. ____________ Currency appreciation 3. ____________ Translation risk 4. ____________ Transaction risk 5. ____________ Exchange rate Column B a. The rate at which one currency can be traded for another currency. b. The possibility that future cash transactions will be affected by changing exchange rates. c. A month ago, 1 U.S. was worth 8.5 Mexican pesos. Today, 1 is worth 9.0 Mexican pesos. The U.S. dollar has undergone what? d. The degree to which a firms financial statements are exposed to exchange rate fluctuation. e. The exchange rate of one currency for another for immediate delivery (today).Q1-14 Suppose the expected spot rate (after 1 year) for euros (in terms of dollars) is $1.50, the current interest rate on euro deposits is 4.5%, and the current interest rate on dollar deposits is 5.5%. What current spot rate would satisfy the uncovered interest parity (UIP) equation? a. $1.65 b. $1.50 c. $1.25 d. $1.485
- 13. The forward exchange rate of 55 days is 1.21 USD/Euro while the current exchange rate is 1.22 USD/Euro. The annual interest rate of USA is 1.13% and of Eurozone is 1.18%. Calculate and show me how you have solved it the cost of the term act and choose one of the following: a. -5.365% b. 5.365% c. -0.819% d. 8.2%Match each term in Column A with its related definition in Column B.Column A1. Spot rate2. Currency appreciation3. Translation risk4. Transaction risk5. Exchange rateColumn Ba. The rate at which one currency can be traded for another currency.b. The possibility that future cash transactions will be affected by changing exchange rates.c. A month ago, $1 U.S. was worth 8.5 Mexican pesos. Today, $1 is worth 9.0 Mexicanpesos. The U.S. dollar has undergone what?d. The degree to which a firm’s financial statements are exposed to exchange ratefluctuation.e. The exchange rate of one currency for another for immediate delivery (today).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.
