Question

The U.S. dollar per British pound spot rate changes from S0(USD/GBP) = USD 1.3786/GBP to S1(USD/GBP)...

The U.S. dollar per British pound spot rate changes from S0(USD/GBP) = USD 1.3786/GBP to S1(USD/GBP) = USD 1.4890/GBP. What is the approximate percentage change in the value of the U.S. dollar?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
S0(USD/GBP) = USD 1.3786/GBP
that means
1 USD = 1/1.3786 GBP
1USD = 0.725374 GBP
Similarly forward rate
1 USD = 1/1.4890
1 USD = 0.671592 GBP
Percentage Change in US dollar = (0.67159 GBP -0.72537 GBP)/0.72537 GBP
=-0.05378/0.725374
= -7.41% (negative answer)
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
If the spot exchange rate changes from S0(ZAR/USD) = ZAR 10.00/USD to S1(ZAR/USD) = ZAR 12.50/USD,...
If the spot exchange rate changes from S0(ZAR/USD) = ZAR 10.00/USD to S1(ZAR/USD) = ZAR 12.50/USD, then South African rand (ZAR) appreciated in value by 25 percent. True or False?
At time zero the spot rate is $1.60 per GBP. Assume that next year the U.S....
At time zero the spot rate is $1.60 per GBP. Assume that next year the U.S. inflation will be 3 %, and British inflation 4%, what is the expected exchange rate at year end? Answer: $1.5846/GBP Assume that next year the U.S. inflation will be 3 %, and British inflation 4%. And the British Pound depreciates 7 % over the year. What is the real exchange rate q, at year end? Answer: ???
The current spot price of the British Pound in USD is USD 1.25. The USD risk-free...
The current spot price of the British Pound in USD is USD 1.25. The USD risk-free rate is 2% while the British Pound risk-free rate is 3% for all maturities. Both rates are annual and continuously compounded. a) Calculate the futures price of the British Pound in USD for delivery in six months. b) Given the same spot rate and the same British Pound risk-free rate, calculate the implied annual risk-free rate in USD if the price of the equity...
The current spot price of the British Pound in USD is USD 1.25. The USD risk-free...
The current spot price of the British Pound in USD is USD 1.25. The USD risk-free rate is 2% while the British Pound risk-free rate is 3% for all maturities. Both rates are annual and continuously compounded. a) Calculate the futures price of the British Pound in USD for delivery in six months. b) Given the same spot rate and the same British Pound risk-free rate, calculate the implied annual risk-free rate in USD if the price of the equity...
The current spot price of the British Pound in USD is USD 1.25. The USD risk-free...
The current spot price of the British Pound in USD is USD 1.25. The USD risk-free rate is 2% while the British Pound risk-free rate is 3% for all maturities. Both rates are annual and continuously compounded. a) Calculate the futures price of the British Pound in USD for delivery in six months. b) Given the same spot rate and the same British Pound risk-free rate, calculate the implied annual risk-free rate in USD if the price of the equity...
A) If the British Pound (GBP) is selling today for $1.272/1GBP (spot rate today) and the...
A) If the British Pound (GBP) is selling today for $1.272/1GBP (spot rate today) and the 180 day forward rate on the British Pound is $1.251, what is the annualized forward premium? B)  If the Euro (EUR) is selling today for $1.126/1 euro (spot rate today) and the 90 day forward rate on the Euro is $1.131/1 euro, what is the annualized forward premium or discount on the Euro?
Suppose that you invested USD $250,000 in British equity securities when spot rate was $1.2500/GBP at...
Suppose that you invested USD $250,000 in British equity securities when spot rate was $1.2500/GBP at an average price of GBP 84/share. Also, assume that the spot rate is $1.1905 and you sold your securities at the average price per share of GBP80/share and converted your money back to USD. What is your average rate of return after converting the stock back into dollars? a. -9.3% b. 9.3% c. 4.85% d. 5% e. none of these
Currency Spot quote Euro (EUR/USD) 1.1278 - 1.1281 British pound (GBP/USD) 1.2845 - 1.2848 Swiss franc...
Currency Spot quote Euro (EUR/USD) 1.1278 - 1.1281 British pound (GBP/USD) 1.2845 - 1.2848 Swiss franc (USD/CHF) 1.0020 – 1.0022 Japanese yen (USD/JPY) 110.41 – 110.44 Dominican peso (USD/DOP) 50.540 – 50.600 Part 2. Forward exchange rates 1. If the 3-month forward bid and ask quotes for the British pound are 15 21, what are the 3-month forward bid and ask exchange rates? 2. How many US dollars will a customer that enters a 3-month forward contract to buy £1...
The current Dollar-Pound exchange rate is 1.60 dollars per British Pound. The U.S. and British risk-free...
The current Dollar-Pound exchange rate is 1.60 dollars per British Pound. The U.S. and British risk-free interest rates (annualized, continuously compounded) are 5% and 7.5%, respectively. Answer the following questions. A. What is the no arbitrage forward price of the British Pound for a 6-month forward contract? B. Suppose the actual forward price is 1.65 dollars per British Pound. Illustrate the arbitrage opportunity.
2. If the Canadian dollar to U.S. dollar exchange rate is 1.05CAD/$ and the British pound...
2. If the Canadian dollar to U.S. dollar exchange rate is 1.05CAD/$ and the British pound to U.S. dollar exchange rate is 0.9pounds/$, what must be the Canadian dollar to British pound exchange rate?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT