Question

A spot trade is defined as an agreement to exchange currencies based on the exchange rate...

A spot trade is defined as an agreement to exchange currencies based on the exchange rate _______ for settlement within _________business day(s).

1. one year from today; 3

2. one year from today; 2

3. today; 3

4. today; 2

5. today; 1

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Option 4 is correct

A spot trade is defined as an agreement to exchange currencies based on the exchange rate today for settlement within 2 business days.

A spot trade is also referred to as Cash And Carry (CNC) trade, in which the transaction happens today but it takes 2 business days for the settlement.

Options 1 and 2 are incorrect because the spot transaction happens today, not one year from today.

Options 3 and 5 are incorrect because the settlement happens in 2 business days, not 1 or 3.

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
A _____________ is an exchange rate quoted today for settlement today. Select one: a. spot rate...
A _____________ is an exchange rate quoted today for settlement today. Select one: a. spot rate b. yield curve c. forward rate d. currency rate
1.The spot rate of interest is defined by s(t) = .1(.9)t for t = 1, 2,...
1.The spot rate of interest is defined by s(t) = .1(.9)t for t = 1, 2, 3, 4, 5. Find the present value of a 5-year annuity-due in which the first payment is equal to $1000, and each subsequent payment increases by 5% of the immediately preceding payment. 2.You are given the following term structure of spot interest rates: Term (in years) Spot interest rate 1 5% 2 5.75% 3 6.25% 4 6.50% A three-year annuity-immediate will be issued a...
Emily speculates on the currencies in the foreign currency exchange market. Currently the spot price for...
Emily speculates on the currencies in the foreign currency exchange market. Currently the spot price for the Danish krona is Dk199.87/$ and the 3-month forward rate is Dk198.53/$. Emily thinks the Danish krona will move to Dk198.00/$ in the next three months.What should Emily do? If Emily has $100,000 explain how much she can earn as profit? Show calculations. Specify the transaction such as buy/sell at forward/spot/ expected future spot rate.
One year ago, the spot exchange rate between Japanese yen and Swiss franc was S_1Y/SFR =...
One year ago, the spot exchange rate between Japanese yen and Swiss franc was S_1Y/SFR = ¥160/SFr/ Today, the spot rate is S_0 ^¥/Sfr = ¥155/SFr. Inflation during the year was p^¥ = 2 percent and p^SFr= 3 percent in Japan and Switzerland, respectively. a.) What was the percentage change in the nominal value of the Swiss franc? b.) One year ago, what nominal exchange rate would you have predicted for today based on the difference in inflation rates? c.)...
Currently the spot exchange rate is $1.33/£ and the one year forward exchange rate is $1.32/£....
Currently the spot exchange rate is $1.33/£ and the one year forward exchange rate is $1.32/£. The yearly interest rate is 1% in US and 3% in U.K. Assume you can borrow as much as $1,330,000. a.      Is interest rate parity currently (IRP) holding? b.      If IRP is not holding, how would you execute a covered interest arbitrage? Show all the steps what you are going to do today and in one year. Also determine the arbitrage profit. c.      Explain how IRP will...
(Uncovered interest parity) What is the relationship among the forward exchange rate, the spot exchange rate,...
(Uncovered interest parity) What is the relationship among the forward exchange rate, the spot exchange rate, and the interest rate? Suppose the (1-year) interest rate on bank deposits is 2% in Canada and 1.5% in United States. If the (1-year) forward US$–C$ exchange rate is C$1.5 per US$ and the spot rate is C$1.2 per US$, what is the expected US$–C$ exchange rate one year ahead?
A 1-year spot rate is 5% today. If the expected future 1-year spot rate from 2...
A 1-year spot rate is 5% today. If the expected future 1-year spot rate from 2 years from now is 6%, what is the possible forward rate between year 2 and year 3? Assume the Expectations Hypothesis holds. A. 4% B. 5% C. 6% D. 7% E. None of the above
The £ spot exchange rate is $1.6135/£, the € spot exchange rate is $1.2021/€, and the...
The £ spot exchange rate is $1.6135/£, the € spot exchange rate is $1.2021/€, and the £/€ spot rate is £0.7380/€.    a) First show whether an arbitrage opportunity exists. (4 points) b) Second, if arbitrage profits are available, describe a strategy to exploit the arbitrage opportunity and calculate the arbitrage profits you would earn. Start by borrowing 1,000 units in one currency and show that at the end of your trades you have more than you borrowed. (8 points)
If the spot exchange rate is 0.62 euro per Canadian dollar and the three-month forward rate...
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...
1. How are spot exchange rates determined? a. Using historical average prices of different currencies b....
1. How are spot exchange rates determined? a. Using historical average prices of different currencies b. Taking the average of a basket of currencies c. The interaction between demand and supply of a currency relative to other currencies d. Government decree e. Predicting future currency movements in nonmember countries Question text 2. Comp-U-Learn Inc. prides itself on a competitive advantage based on their proprietary educational software technology. What two entry modes should the company avoid in order to minimize the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT