Question

**Assume the current Euro-Dollar exchange rate is 0.9
EUR/USD. Based on your analysis you expect the Euro to depreciate.
What is your trading strategy? Discuss. How much would you invest
in this strategy?**

Answer #1

My trading strategy will be to go long on United States dollar in futures or we can also short the the European Euros in future markets.

This depreciation of European euros can also be played through currency options in which I will be trying to take the put option of the European currency and I can also take the call option of American Dollars.

This strategy is mostly related to maximisation of rate of return through depreciation of European Euros and appreciation of American Dollars in the futures so I will be trying to play with the depreciation of European Euros and appreciation of American Dollars.

Assume the current Euro-Dollar exchange rate is 0.9
EUR/USD. Based on your analysis you expect the Euro to depreciate.
What is your trading strategy? Discuss. How much would you invest
in this strategy?

Assume the current Euro-Dollar exchange rate is 0.9 EUR/USD.
Based on your analysis you expect the Euro to depreciate. What is
your trading strategy? Discuss. How much would you invest in this
strategy? Note: Not missing any other info or graphs.

Today the current EUR to USD exchange rate is 1 EUR = 1.19 USD.
According to the Bloomberg consensus estimate, the EUR to USD
exchange rate in four years is forecasted to be 1 EUR = 1.31 USD.
You begin with 100 USD today and will invest in a European security
that provides 10% annual returns (in EUR). Using this information,
answer the following six (6) questions.
1) Is the USD forecasted to appreciate or depreciate relative to
EUR? a)...

You are a U.S.-based treasurer with $1,000,000 to invest. The
dollar-euro exchange rate is quoted as $1.20 = €1.00 and the
dollar-pound exchange rate is quoted at $1.80 = £1.00. If a bank
quotes you a cross rate of £1.00 = €1.50 how much money can you
make via triangular arbitrage (in terms of dollars)?
• 1,160,000
• 0
• 500,000
• 250,000
Can you tell me if my math is correct? Answer is 0
Steps:
Convert USD 1,000,000 to...

The current USD/EUR exchange rate is 1.4050 dollar per
EUR. The six month forward exchange rate is 1.3600. The 10-month
USD interest rate is 7% per annum continuously compounded. Estimate
the 10-month EUR interest rate. Answer with 4 digit decimal
accuracy.

5) (3 pts) Assume the direct exchange rate on the Euro is
$1.123/1 Euro, and the direct exchange rate on the Australian
dollar is US$0.663/1 AUD, what is the cross rate of the Euro with
respect to Australian dollars. That is, how many AUD are equal one
euro?
(2 pts) If the direct exchange rate on the Euro is
trading at $1.094 / 1 EUR, how much would it cost to buy a widget
from Germany for 60 Euros?
(2...

Japanese Yen to Canadian Dollar 78.87 JPY/CAD
United States Dollar to Euro 1.16 USD/EUR
Swiss Franc to Canadian Dollar 0.69 CHF/CAD
Swiss Franc to Euro 1.08 CHF/EUR.
Determine the implied USD/JPY cross rate. (2 POINTS)
Suppose that the JPY to USD exchange rate is 111 JPY/1 USD. Is
there any arbitrage opportunity? Explain in words why you think
that is the case. (2 POINTS)
Assume you have 520 JPY. What is your profit in JPY, (show your
calculations)? (2 POINTS)

The direct quotation for EUR dollar is 1.15 USD. The annual
forward premium is 7%.
a) Do you expect the USD to appreciate or depreciate?
b) What is the 180-day forward rate on a contract to purchase
USD with EUR?

Construct cross-rate for bid & ask prices
IF dollar-euro exchange rate is USD1.25 = EUR1.00 and the
dollar-Yen exchange rate is JPY200 = USD1.00. What is the EUR-JPY
cross rate?
USD equivalent
Country
BID
ASK
Switzerland (Franc) CHF
$0.65/CHF
$0.68/CHF
Euro €
$1.15/€
$1.2/€
Triangular Arbitrage
Helen Depp, who trades at an FX cubicle in a big bank in UK
notices the following exchange rates of the USD per pound and USD
per euro.
$1.2195/€ or €0.82/$
$1.2262/£ or
£0.8155/$...

6. Assume that the current dollar-Euro exchange rate
(E$/€) is equal to 1.05, the real exchange rate
(qus/Eur) = 1.26, the price level equals 1 in the U.S.
and 1.2 in Europe. Assume that relative PPP holds.
a. If inflation is 4% in the U.S. but 1% in Europe, what will be
the price levels in the U.S. and Europe a year from now?
b. Given your answer to part a, what will be the nominal
exchange rate (E$/€) a...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 2 minutes ago

asked 9 minutes ago

asked 17 minutes ago

asked 29 minutes ago

asked 49 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago