As an Omani investor you have invested in Tunisian Government bonds (denominated in Tunisian Dinar) which pays you fixed coupon rate. Assume that during your investment period, the Omani Rial (OMR) has significantly appreciated against Tunisian Dinar. How would it affect your cash flows in Oman? Why?
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As an Omani investor you have invested in Tunisian Government bonds (denominated in Tunisian Dinar) which pays you fixed coupon rate. Assume that during your investment period, the Omani Rial (OMR) has significantly appreciated against Tunisian Dinar. How would it affect your cash flows in Oman? Why?
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- Assume that you are an Omani investor and you have invested in Brazilian Government bonds which pays you fixed coupon rate. During your investment period, the Omani currency (OMR) has significantly appreciated against Brazilian currency (real). How would it impact your cash flows in Oman?Assume that you are an Omani investor and you have invested in Brazilian Government bonds which pays you fixed coupon rate. During your investment period, the Omani currency (OMR) has significantly appreciated against Brazilian currency (real). How would it impact your cash flows in Oman? 2. Assume that you are the CFO of Apple company which mainly sells its products (mobile phones and tablets etc.) in emerging markets. During the given year, the US dollar has significantly depreciated against the basket of emerging markets’ currencies. How would it affect the Apple’s income that is headquartered in the US? 3. How the situation in (ii) would affect the share price of Apple 4 . As the investment manager of the Oman investment fund, you wish to have a well-diversified international bond portfolio? What types of risks can be reduced by investing in such a portfolio?Investors from Japan, Philippines, and China frequently invest in each other based on prevailing interest rates. If China’s interest rates increase, Japanese investors are likely to buy ____ peso denominated securities, and the Chinese yuan is likely to ____ relative to the peso. A. more; depreciate B. more; appreciate C. fewer; depreciate D. fewer; appreciate
- Suppose vou are a UK-based investor and the interest rate on investments in UK is 0.85% pa. and the interest rate for comparable investments in USTis 1.35% p.a. Suppose further that the spot rate is GBP 0.7267 /USD and that the quoted one-year forward rate by the bank is GBP 0.7195 /USDa.) If covered interest rate holds, Is there an arbitrage opportunity? Why?b.) If yes, how high is it if you were able to borrow USD twenty million at the above rates from a US bank for one year? Please state the gain in USD.Assume U.S. interest rates are generally above foreign interest rates. What does this suggest about the future strength or weakness of the dollar based on the IFE? Should U.S. investors invest in foreign securities if they believe in the IFE? Should foreign investors invest in U.S. securities if they believe in the IFE?Assume you are a potential investor in Ghana and based on your analysis of the Ghanaian financial market, you are expecting interest rate to rise in the long term. How will this expectation affect: Required:a. Investor’s behaviour with respect to their choice for short or long-term assets.b. The shape of the yield curve in Ghana today.c. Borrowers who plan to issue securities in the financial market.
- You are Chief Investment Officer of ABC Inc., Canada based company. If the Canadian dollar is week in recent days but you expect the Canadian dollars will be stronger over time, how will these expectations affect your investment decision in US securities? Will you invest in US securities? Why?Which of the following is an example of a firm-specific risk? The Federal Reserve decreases the federal funds rate U.S. government announces an increase in corporate tax rate Bond investor invests in a Japanese investment grade bond and receives coupon payments in Japanese yens Bond investor learns from the news that the inflation rate is expected to increase next yearImagine an American MNC. Why it might decide to borrow in a country such as Brazil, where interest rates are high, rather than a country like Germany, where interest rates are low? Discuss why this may be the best strategy for the firm, given your understanding of the relationship between inflation, interest rates, and exchange rate.
- Assume you are a potential investor in Ghana and based on your analysis of the Ghanaian financial market, you are expecting interest rate to rise in the long term. How will this expectation affect: Required:i. Investor’s behaviour with respect to their choice for short or long-term assets.ii. The shape of the yield curve in Ghana today.iii. Borrowers who plan to issue securities in the financial market.Suppose that California Co., a U.S. based MNC, seeks to capitalize a difference in interest rates between euros and British pounds via the use of a carry trade. In particular, after 1 month, funds invested in euros will yield a 0.50% percent return, while funds invested in pounds will yield a return of 2.00% percent. Currently the spot rate of the British pound is $1.00 while the spot rate of the euro is $0.80. In other words, the pound is worth 1.25 euros. California Co. expects these spot rates to remain constant over the next month. After repaying their euro loan, California Co. has 211,200 pounds remaining. Assume that the exchange rate is still $1.00 per pound. These pounds are equivalent to $ , which represents a profit of $ over the initial $200,000 that California Co. used from their own funds.If a country experiences an increase in interest rates relative to U.S. interest rates, the inflow of U.S. funds to purchase its securities should ____, the outflow of its funds to purchase U.S. securities should ____, and there is ____ pressure on its currency's equilibrium value. * A) increase; decrease; downward. B) decrease; increase; upward. C) increase; decrease; upward. D) decrease; increase; downward.