Question

You have a borrowing capacity of 5 million USD, and 500 million
JPY.

You observe that the bid/ask interest rate quote on USD is 1%/3%.
The bid/ask interest rate quote on the JPY is 0.5%/2%. The spot
exchange rate is 85.7 JPY/USD, and you expect that the USD is going
to appreciate to 103 JPY/USD over the next 6 months (180
days).

If you conduct a speculative trade on your expectations of exchange
rate change, and your expectations are correct, what will be your
total profit, as measured in USD?

Answer #1

You have a borrowing capacity of 5 million USD, and 500 million
JPY.
You observe that the bid/ask interest rate quote on USD is
1%/3%. The bid/ask interest rate quote on the JPY is 0.5%/2%. The
spot exchange rate is 86.6 JPY/USD, and you expect that the USD is
going to appreciate to 95.9 JPY/USD over the next 6 months (180
days).
If you conduct a speculative trade on your expectations of
exchange rate change, and your expectations are correct,...

You are given to following BC (Borrowing Capacity in two
different currency; 70 million in USD and 50 million in Euro. the
current spot of Euro is 1.20 (EUR/USD) and you are expecting a down
swing of EUR against USD, i.e. EUR to be 1.18 in next 10 days. Your
borrowing rate for USD is 2% and lending rate for USD is 1.25%.
Your Borrowing rate for EUR is 1.5% and lending rate for Euro is
.5%.
Conduct the currency...

You get a bid-ask quote of 1-1.15 USD/CAD, and a bid-ask quote
of 86-88 JPY/USD. If you have some CAD, and want to buy some JPY,
what is your resulting price for JPY, expressed as CAD/JPY? Enter
answer accurate to 5 decimal places.

You are looking at the markets for THB (Thai bahts) and EUR. You
observe that the bid/ask interest rates in Thailand are 20%/22%,
and the bid/ask interest rates on the euro are 2%/4%. The spot
exchange rate is 40.9 THB/EUR, and you expect that in the next 3
months (90 days) the exchange rate will not move much, moving to
41.3 THB/EUR.
Your borrowing capacity is 2 million EUR and 50 million THB.
Based on this information, you decide to...

You are looking at the markets for THB (Thai bahts) and EUR. You
observe that the bid/ask interest rates in Thailand are 20%/22%,
and the bid/ask interest rates on the euro are 2%/4%. The spot
exchange rate is 40.9 THB/EUR, and you expect that in the next 3
months (90 days) the exchange rate will not move much, moving to
42.1 THB/EUR. Your borrowing capacity is 2 million EUR and 50
million THB. Based on this information, you decide to...

You are looking at the markets for THB (Thai bahts) and EUR. You
observe that the bid/ask interest rates in Thailand are 20%/22%,
and the bid/ask interest rates on the euro are 2%/4%. The spot
exchange rate is 40.9 THB/EUR, and you expect that in the next 3
months (90 days) the exchange rate will not move much, moving to
41.3 THB/EUR. Your borrowing capacity is 2 million EUR and 50
million THB. Based on this information, you decide to...

You are looking at the markets for THB (Thai bahts) and EUR. You
observe that the bid/ask interest rates in Thailand are 20%/22%,
and the bid/ask interest rates on the euro are 2%/4%. The spot
exchange rate is 40.1 THB/EUR, and you expect that in the next 3
months (90 days) the exchange rate will not move much, moving to 42
THB/EUR. Your borrowing capacity is 2 million EUR and 50 million
THB. Based on this information, you decide to...

You are looking at the markets for THB (Thai bahts) and EUR. You
observe that the bid/ask interest rates in Thailand are 20%/22%,
and the bid/ask interest rates on the euro are 2%/4%. The spot
exchange rate is 40.7 THB/EUR, and you expect that in the next 3
months (90 days) the exchange rate will not move much, moving to
41.2 THB/EUR.
Your borrowing capacity is 2 million EUR and 50 million THB.
Based on this information, you decide to...

You are looking at the markets for THB (Thai bahts) and EUR. You
observe that the bid/ask interest rates in Thailand are 20%/22%,
and the bid/ask interest rates on the euro are 2%/4%. The spot
exchange rate is 40.9 THB/EUR, and you expect that in the next 3
months (90 days) the exchange rate will not move much, moving to
42.1 THB/EUR.
Your borrowing capacity is 2 million EUR and 50 million THB.
Based on this information, you decide to...

You are looking at the markets for THB (Thai bahts) and EUR. You
observe that the bid/ask interest rates in Thailand are 20%/22%,
and the bid/ask interest rates on the euro are 2%/4%. The spot
exchange rate is 40.9 THB/EUR, and you expect that in the next 3
months (90 days) the exchange rate will not move much, moving to
41.2 THB/EUR.
Your borrowing capacity is 2 million EUR and 50 million THB.
Based on this information, you decide to...

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