he following are the spot and the swap forward rates of the ZAR/EUR Spot 15.7500–15.9500 One-month 400–205 This means that the rand is selling at a forward discount. the rand is selling at a forward premium. the euro dollar is selling at a forward discount. Both b) and c) after allowing for transaction costs, both currencies sell at par.

he following are the spot and the swap forward rates of the ZAR/EUR Spot 15.7500–15.9500 One-month 400–205 This means that the rand is selling at a forward discount. the rand is selling at a forward premium. the euro dollar is selling at a forward discount. Both b) and c) after allowing for transaction costs, both currencies sell at par.

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter5: Currency Derivatives

Section: Chapter Questions

Problem 28QA

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The following are the spot and the swap forward rates of the AUD/USD Spot 1.2500–1.2550 One-month 40–20 This means that the US dollar is selling at a forward discount. the US dollar is selling at a forward premium. the Australian dollar is selling at a forward discount. after allowing for transaction costs, both currencies sell at par.
) In another case are these quotes: Spot rate €1.2562/£; 1 month forward €1.2662/£. Which of the two currencies is trading at forward premium?
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 CIP
Suppose the spot price of a euro in dollars is $0.932. The U.S. interest rate for 90 days is 6.875% and the euro rate for 90 days is 4.450%. All interest calculations are done as rate times (#days/360). a. What is the rate for a 90-day forward contract on the euro? b. Suppose the euro forward contract is currently quoted at $0.95. What type of transaction(s) should an arbitrageur conduct to take advantage of the apparent mispricing Only typed answer
The following table shows the midmarket (i.e., average of the bid and offer) for the current YEN/GBP spot exchange rate as well as for GBP and YEN 270-day LIBOR (annualized): Spot (YEN/GBP) 270-day LIBOR (GBP) 270-DAY LIBOR (YEN) 1.2089 5.25% 1.25% 1. What is the forward premium or discount for a 270-day forward contract for YEN/GBP?
The Spot Exchange Rate is OMR 0.385030 = 1 USD and 90 days forward rate is OMR 0.394030 = 1USD (Home Currency is OMR, which is given as Direct quotes). Does the OMR is trading at premium or discount in 90 days forward market?
If spot rate is USD2.5968/OMR and interest rate for USD is 2% per annum. One-year forward exchange rate is USD 2.6008/OMR. If interest rate parity holds and USD is the Home currency, then calculate the interest for OMR? 1.8431% 0.021571% 2.1571% 0.018431%
The following market data relate to USD and Yen rates:Spot USD/YEN 116.003 months dollar deposit rate 4.5%6 months dollar deposit rate 5%3 months yen deposit rate 0.25%6 months yen deposit rate 0.25%FRA rate for yen is nil a.What is a forward rate agreement? B .What would be the 6 month USD/Yen forward rate?C .What should be the 3 month USD FRA rate 3 months forward? D .The 6 and 12 month USD libors are 5% and 6.5% respectively. What should your bank do if another bank is quoting 6/12 USD FRA at 6.5 -6.75%?
The Wall Street Journal reported the following spot and forward rates for the Swiss franc ($/SF): Spot $0.820230-day forward $0.824490-day forward $0.8295180-day forward $0.8343Was the Swiss franc selling at a discount or premium in the forward market? What was the 30-day forward premium (or discount)? What was the 90-day forward premium (or discount)? Suppose you executed a 90-day forward contract to exchange 100,000 Swiss francs into U.S. dollars. How many dollars would you get 90 days hence? Assume a Swiss bank entered into a 180-day forward contract with Bankers Trust to buy $100,000. How many francs will the Swiss bank deliver in six months to get the U.S. dollars?
The 90-day forward rate for the euro is $1.07, while the current spot rate of the euro is $1.05. The annualized forward premium or discount of the euro suppose to be _______. A. 1.9 percent discount B. 1.9 percent premium C. 7.6 percent premium D. 7.6 percent discount
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.
Assume that 90-day U.S. securities have a 4.5% annualized interestrate whereas 90-day Swiss securities have a 5% annualized interestrate. In the spot market, 1 U.S. dollar can be exchanged for 1.2Swiss francs. If interest rate parity holds, what is the 90-dayforward rate exchange between U.S. dollars and Swiss francs?(0.8323 $ per SFr or 1.2015 SFr per $)

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		the rand is selling at a forward discount.
		the rand is selling at a forward premium.
		the euro dollar is selling at a forward discount.
		Both b) and c)
		after allowing for transaction costs, both currencies sell at par.