Question

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?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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
The spot rate on the London market is £0.5525/$, while the 90-day forward rate is £0.5587/$....
The spot rate on the London market is £0.5525/$, while the 90-day forward rate is £0.5587/$. What is the annualized forward premium or discount on the British pound? (Round answer to 2 decimal places, e.g. 17.54%. Use 360 days for calculation.)
Your answer is incorrect. Try again. The spot rate on the London market is £0.5525/$, while...
Your answer is incorrect. Try again. The spot rate on the London market is £0.5525/$, while the 90-day forward rate is £0.5587/$. What is the annualized forward premium or discount on the British pound? (Round answer to 2 decimal places, e.g. 17.54%. Use 360 days for calculation.) Forward premium or (discount) %
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?
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 spot quote for CS is $0.9850-60. If you buy $10,000 at the current rate,...
The Current spot quote for CS is $0.9850-60. If you buy $10,000 at the current rate, it will cost you C$10, 152.28. True or False The spot rate on the British pound is 1.2450. If the current interest rate on the British pound is 3% on the US$ is 2%, the six-month equilibrium forward on British pound is? The spot and 180-day forward rates for the SFr are $0.7350 and $0.7406, respectively. The SFr is said to be selling at...
The current USD/JPY spot exchange rate is 110 (USD is base currency). Assume that your bank...
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...
Using the following data, answer the following questions: Spot:                               &nbs
Using the following data, answer the following questions: Spot:                                                                      £1 = $1.4487 30‑day forward:                                                   £1 = $1.4498 90‑day forward:                                                   £1 = $1.4511 180‑day forward:                                                £1 = $1.4529 How much would £1,500,000 cost in dollars? Is the British pound expected to appreciate or depreciate over the next 6 months? What is the 90-day forward premium or discount for the British pound? ALL IS ONE PROBLEM
Consider the following information available in the Diamond Bank:         Spot Rate for the British Pound Sterling...
Consider the following information available in the Diamond Bank:         Spot Rate for the British Pound Sterling                                                        $1.60         90 – day forward rate of the pound                                                                $1.59         90 – day UK interest rate                                                                                       4%         90 – day U.S. interest rate                                                                                     3% (a)Given this information, would it be a prudent strategy to engage in covered interest arbitrage? Explain (b)If covered interest arbitrage is profitable how much profit would an investor earn if he/she uses $1,000,000? (c)Briefly discuss the realignment process that will...
Assume that the spot rate for May 10, 2018 (“today”) is $/€ = 1.1215,       Calculate the...
Assume that the spot rate for May 10, 2018 (“today”) is $/€ = 1.1215,       Calculate the 30day, 90day, 180day (assume a 360day year) and for the dates shown below the actual and annualized forward premium or discount (“f”in %) for the U.S. dollar compared to the euro 30day $/€ forward rate = 1.1944 90day $/€ forward rate = 1.198218 180day $/€ forward rate = 1.2048 $/€ forward rate on December 17, 2019 = 1.2054
Covered Interest Arbitrage. Assume the following information: • British pound spot rate = $1.65. • British...
Covered Interest Arbitrage. Assume the following information: • British pound spot rate = $1.65. • British pound one-year forward rate = $1.65 • British one-year interest rate = 12 %. • U.S. one-year interest rate = 10 %. Explain how U.S. investors could use covered interest arbitrage to lock in a higher yield than 9 percent. What would be their yield? Explain how the spot and forward rates of the pound would change as covered interest arbitrage occurs.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT