If Lucia buys 20 call contracts on Spanish pesetas in the London Exchange (one option contract consists of 10,000 pesetas), what is Lisa's net profit (including premium) if the spot rate at the end of 180 days is £ 181.397/Pta?
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- Samuel works for Peregrine Investments Indonesia. He focuses his time and attention on the U.S. dollar/Singapore dollar ($/S$) cross-rate. The current spot rate is $1.39/S$. After considerable study, he has concluded that the Singapore dollar will appreciate versus the U.S. dollar in the coming 90 days, probably to about $1.44/S$. He is considering trading options to profit and has the following options on the Singapore dollar to choose from: Option choices on the Singapore dollar: Call on S$ Put on S$ Strike price (US$/Singapore dollar) $1.35 $1.45 Premium (US$/Singapore dollar) $0.047 $0.065 Samuel decides to sell put options on Singapore dollars. What is Samuel's break-even spot rate at maturity?Samuel works for Peregrine Investments in Indonesia. He focuses his time and attention on the U.S. dollar/Singapore dollar ($/S$) cross-rate. The current spot rate is $1.39/S$. After considerable study, he has concluded that the Singapore dollar will appreciate versus the U.S. dollar in the coming 90 days, probably to about $1.44/S$. He is considering trading options to profit and has the following options on the Singapore dollar to choose from Option choices on the Singapore dollar: Call on S$ Put on S$ Strike price (US$/Singapore dollar) $1.356 $1.37 Premium (US$/Singapore dollar) $0.047 $0.006 Samuel decides to buy call options in Singapore dollars. What will be Samuel's break-even spot rate?Vatic Capital. Cachita Haynes works as a currency speculator for Vatic Capital of Los Angeles. Her latest speculative position is to profit from her expectation that the U.S. dollar will rise significantly against the Japanese yen. The current spot rate is ¥118.00/$. She must choose between the following 90-day options on the Japanese yen: . a. Should Cachita buy a put on yen or a call on yen? b. What is Cachita's breakeven price on the option purchased in part a? c. Using your answer from part a, what is Cachita's gross profit and net profit (including premium) if the spot rate at the end of 90 days is ¥140.00/$? a. Should Cachita buy a put on yen or a call on yen? (Select the best choice below.) O A. Cachita should buy a call on yen to profit from the rise of the dollar (the fall of the yen). O B. Cachita should buy a put on yen to profit from the rise of the dollar (the fall of the yen). O C. Cachita should buy a call on yen to profit from the fall of the dollar (the rise of the…
- A broker wants to sell a customer an investment costing $100 with an expected payoff in one year of $108.6. The customer indicates that a 8.6 percent return is not very attractive. The broker responds by suggesting the customer borrow $80 for one year at 6.6 percent interest to help pay for the investment. a. What is the customer's expected return if she borrows the money? (Round your answer to 1 decimal place.) Customer's expected return %Maria plans to take a scheme loan to expand her trading business. Based on her survey, she ended up with two plans which are Plan A and Plan B. She could get enough cash through Plan A that uses simple interest promissory note which offers RM25,000 for 180 days with a simple interest rate of 10% per annum. On the other side, Plan B also offers RM26,000 with a bank discount loan of 11% for 180 days. i. Compare the value of interest in Plan A with the bank discount amount in Plan B. ii. Calculate the amount received by Maria in each plan. iii. Compute the maturity value for each plan. iv. Identify which plan is better for Maria to take a loan. Justify your answer.Suppose you are working as a treasurer in Citibank and your bank has taken a PKR250 million loan. The interest on the loan is KIBOR+50bp paid semiannually. The duration of the loan is four years. As you will have to pay interest, you are worried that in the future interest rates are likely to increase and you want to hedge this position by entering into a Swap contract. You ask Bank Al-Habib whether they would be willing to enter into a swap agreement and they send you these semi-annual swap rates: Period Bank Pays Bank Receives 2 years 3.34 3.37 3 years 4.01 4.04 4 years 4.47 4.50 5 years 4.79 4.82 6 years 5.02 5.05 Consider the following questions: What is the company’s cost of funds?
- An individual is investing in a market where spot rates and forward rates apply. In this market, if at time t=0 he agrees to invest £5.0 for two years, he will receive £7.1 at time t3D2 years. Alternatively, if at time t=0 he agrees to invest £4.4 at time t=1 for either one year or two years, he will receive £7.6 or £8.0 at times t=2 and t=3, respectively. Calculate the price per £5,000 nominal that the individual should pay for a fixed-interest bond bearing annual interest of 6.5% and is redeemable after 3 years at 105%. State your answer at 2 decimal places. Answer: CheckAn actor needs $300,000 for his vacation on October 1. He is worried about the increasing forex prices, andwants to lock the forex rate via a currency swap. He then enters a 3-month forward for 1 USD = PHP 50. On October 1, the forex rate is trading at 1 USD = PHP 48. Did the actor lose or gain profits, and by how much? (Please show your solution)If an investor invests her money in a project with a 10% annual return. What is her nominal rate of return after two years. What is her effective rate of return after two years.1) Do the calculations manually then check them using an online financial calculator. You may also use financial software. 2) In your deliverable, you need to describe the tool you used
- Marsha Stone is thinking about investing $10,000 for a period of 1 year, 1 year from now, in an interest bearing security. Jamila, at the bank, is assisting her in choosing the appropriate investment. She pulls up the current interest rate data on her computer and lets Marsha has a look at it. A review of interest rates reveals as follows: Current 1-year rate = 2% p.a.Current 2-year rate = 4% p.a. Both Jamila and Marsha are confused with the information because though the interest rates for one and 2 year investments are available, the interest rate for a 1-year investment that will commence one year from now, is not there to see. Imagine that you are Jamila’s supervisor. How can you help the two ladies out? How much money will Marsha end up with when her investment matures? Show relevant calculations to support your response.Assume that Pure Expectations theory is valid.You plan to buy a real estate property. You have $838 to invest and aim to have $2983.16. You plan on investing in a cryptocurrency ETF that you think will have a return of 30.6%. How long until you reach your goal? Include up to 2 decimal places. Answer:Jessica Jones intention to make a loan from the Citibank to buy property in Edinburgh. Citibank offered her monthly interest rate: 0.8%. She could pay back of £300,000 in 7 years. If you were her banker, please build up for her payment schedule with the clear breakdown in term of interest payment and principal payment in every period by using Goal Seek and IPMT function.