Question

If the spot exchange rate is 0.62 euro per Canadian dollar and
the **three-month forward rate** is 0.60 euro per
Canadian dollar, then the ________ on the Canadian dollar in
percentage (**at an annual rate**) is roughly
________.

Select one:

a. forward premium, 3.226%

b. forward premium, 12.90%

c. forward discount, 12.90%

d. forward discount, 3.226%

The 1-year interest rates on Canadian dollar and U.K. pound are
2 % and 5 % respectively. If the current spot rate is 2 Canadian
dollar per pound, then the 1-year forward rate (F _{Canadian
$/£} ) implied by the covered interest rate parity
approximation would be______.

Select one:

a. 1.94

b. 2.15

c. 2.06

d. 0.97

If two countries had the same term structures of interest rates, then the forward premium or discount would be_________.

Select one:

a. decreasing

b. increasing

c. one

d. zero

Suppose that the U.S. inflation rate is 4 percent and the U.K. inflation rate is 1.5 percent. The current spot rate is 1.2 $/£ today. The PPP exchange rate in the long run should be______; and the U.K. pound today is said to be________.

Select one:

a. 1.17 $/£; undervalued

b. 1.23 $/£; undervalued

c. 1.23 $/£; overvalued

d. 1.17 $/£; overvalued

Answer #1

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1. 27
The 1-year interest rates on Canadian dollar and U.K. pound are
2 % and 5 % respectively. If the current spot rate is 2 Canadian
dollar per pound, then the 1-year forward rate (F Canadian
$/£ ) implied by the covered interest rate parity
approximation would be______.
Select one:
a. 2.15
b. 2.06
c. 1.94
d. 0.97
1.29
If the spot exchange rate between dollars and pounds is equal to
1.8 dollars for one U.K. pound and the...

Suppose the spot exchange rate for the Canadian dollar is
Can$1.15 and the six-month forward rate is Can$1.17.
a.
Which is worth more, a U.S. dollar or a Canadian dollar?
b.
Assuming absolute PPP holds, what is the cost in the United
States of an Elkhead beer if the price in Canada is Can$3.00?
(Round your answer to 3 decimal places, e.g.,
32.161.)
c.
Is the U.S. dollar selling at a premium or a discount relative
to the Canadian dollar?...

The spot rate of exchange between the U.S. dollar and the euro
is 1.35 (dollar/euro) and the three-month forward rate of exchange
is 1.29.
Select one:
a. The euro is selling at a discount and the standard forward
discount is 17.78 percent.
b. The euro is selling at a premium and the standard forward
premium is 18.60 percent.
c. The euro is selling at a premium and the standard forward
premium is 15.78 percent.
d. The euro is selling at...

Suppose the spot
exchange rate for the Canadian dollar is Can$1.04 and the six-month
forward rate is Can$1.06.
a.
Which is worth more, a U.S. dollar or a Canadian dollar?
Canadian dollar
U.S. dollar
b.
Assuming absolute PPP holds, what is the cost in the United States
of an Elkhead beer if the price in Canada is Can$2.69?
(Enter your answer as directed, but do not round
intermediate calculations. Round your answer to 2 decimal places,
e.g.,...

Suppose the spot exchange rate for the Canadian
dollar is Can$1.06 and the six-month forward rate is Can$1.08.
a.
Which is worth more, a U.S. dollar or a Canadian dollar?
b.
Assuming absolute PPP holds, what is the cost in the United
States of an Elkhead beer if the price in Canada is Can$2.89?
(Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
c.
Is the U.S. dollar selling at a premium or a...

The spot rate for the Canadian dollar is $0.988 per C$. The 30
day forward rate is $0.990 per C$. The forward rate for Canadian
dollar contains an annualized ________________ of ________%.
a. discount; 2.42
b. premium; 2.42
c. discount; 4.12
d. premium; 4.12

The spot exchange rate for Canadian dollars is $C1.33/$US.Dollars
six-month interest rate
one-year interest rateCanada
2%
2.5%U.S.
2.5%
2.75%a. What is the six-month fair forward
exchange rate?b. Is the Canadian dollar a discount
or premium currency vs. the United States dollar?c. What does it cost in U.S. dollars
to purchase $C1,000 now?d. How many Canadian dollars will you
receive by entering a six-month forward contract to sell
$1,000?e. What will it cost in Canadian
dollars to purchase...

The current spot exchange rate is $1.15 /Euro and the
three-month forward rate is $1.30/Euro. Consider a three-month
American call option on €62,500 with a premium of $0.25 per
Euro.
For this option to be considered out- of-money, the strike price
can be_____________.
$1.25
$1.50
$1.00
$1.15

Suppose the spot exchange rate for the Canadian dollar is
Can$1.10 and the six-month forward rate is Can$1.07.
Assuming absolute PPP holds, what is the cost in the United
States of an Elkhead beer if the price in Canada is Can$3.14?

The current USD/JPY spot exchange rate is 110 (USD is base
currency). Assume that your bank quotes you a 180-day forward rate
of 108. Which of the following statements is correct about the
JPY.
Select one:
A. The JPY is selling at an annualized forward discount of
3.64%.
B. The JPY is selling at an annualized forward premium of
1.85%.
C. The JPY is selling at an annualized forward premium of
3.70%.
D. The JPY is selling at an annualized...

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