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- Smart banking corp can borrow $5 million at 6 percent annualized.it can use the proceeds to invest in Canadian dollars at 9 percent annualized over a 6-day period. The canadian dollar is worth $.95 and is expected to be worth $.96 in 6 days. Based on this information, should smart banking corp. Borrow U.S dollars and invest in Canadian dollars? What would be the gain or loss in U.S dollars?smart banking corp. can borrow $5 million at 6 percent annualized. it can use the proceeds to invest in Canadian dollars at 9 percent annualized over a six - day period. the canadian dollar is worth $.95 and is expected to be worth $.94 is six days. based on this information, shiuld smart banking corp borrow U.S. dollars and invest in canadian dollars? whar would be the gain or loss in U.S. dollars? dont chatgpt answerSmart Banking Corp. can borrow $5 million at 6 percent annualized. It can use theproceeds to invest in Canadian dollars at 9 percent annualized over a 6-day period. TheCanadian dollar is worth $.95 and is expected to be worth $.94 in 6 days. Based on thisinformation, should Smart Banking Corp. borrow U.S. dollars and invest in Canadiandollars? What would be the gain or loss in U.S. dollars?
- Tony Fernandes, a foreign exchange trader in Canada, has CAD. 4,000,000 forshort-term money market investment and wants to make profit based on thefollowing rates. Explain specific steps that Tony Fernandes must take to makea covered interest arbitrage.6-month Canadian interest rate: 1.60% per annum6-month Yen interest rate: 2.95% per annumSpot rate: JYP 93.1395/CAD.6-month Forward Rate JYP 93.8380/CAD.CAD = Canadian DollarJYP = Japanese YenSuppose a bank provides the following quotes: Bid 1.2567 CAD per U.S. Dollar and Ask 1.2682 CAD per U.S. Dollar Suppose you would like to buy Canadian Dollars and sell U.S. Dollars. Given the quotes above, what rate would you receive? Group of answer choices 0.0115 CAD per USD 2.5249 CAD per USD 1.2682 CAD per USD 1.2567 CAD per USDJack Ma, a foreign exchange trader in Canada, has CAD. 4,000,000 for short-term money market investment and wants to make a profit based on the following rates. Explain specific steps that Jack Ma must take to make a covered interest arbitrage. CAD= Canadian Dollar JYP= Japanese Yen 6-month Canadian interest rate 1.6% per annum 6-month Yen interest rate 2.95% per annum Spot rate JYP 93.1395/CAD 6-month forward rate JYP 93.8380/CAD Step 1 1) Different i for Base rate -Quote rate = 2) Different between Spot and Forward = (1) + (2) = invest in _ borrow in _ Step 2 explain using table
- Assume that today 1 Canadian dollar is worth 0.75 U.S. dollar. How many Canadiandollars would you receive for 1 U.S. dollar?GBA Company wishes to raise $5,000,000 with debt financing. The funds will be repaid with interest in 1 year. The treasurer of GBA Company is considering three sources: i. Borrow USD from Citibank at 1.50% ii. Borrow EUR from Deutsche Bank at 3.00% iii. Borrow GBP from Barclays at 4.00% If the company borrows in euros or British pounds, it will not cover the foreign exchange risk; that is, it will change foreign currency for dollars at today’s spot rate and buy foreign currency back 1 year later at the spot rate prevailing then. The GBA Company has no operations in Europe. A representative of GBA contacts a local academic to provide projections of the spot rates 1 year in the future. The academic comes up with the following table: Currency Spot Rate Projected Rate 1 Year in the Future USD/GBP 1.5 1.55 USD/EUR 0.95 0.85 What are the projected USD/GBP rate and USD/EUR rate for which the expected interest costs would be the same for the three…GBA Company wishes to raise $5,000,000 with debt financing. The funds will be repaid with interest in 1 year. The treasurer of GBA Company is considering three sources: i. Borrow USD from Citibank at 1.50% ii. Borrow EUR from Deutsche Bank at 3.00% iii. Borrow GBP from Barclays at 4.00% If the company borrows in euros or British pounds, it will not cover the foreign exchange risk; that is, it will change foreign currency for dollars at today’s spot rate and buy foreign currency back 1 year later at the spot rate prevailing then. The GBA Company has no operations in Europe. A representative of GBA contacts a local academic to provide projections of the spot rates 1 year in the future. The academic comes up with the following table: Currency Spot Rate Projected Rate 1 Year in the Future USD/GBP 1.5 1.55 USD/EUR 0.95 0.85 What is the expected interest rate cost for the loans in EUR and GBP?
- Jack Ma, a foreign exchange trader in Canada, has CAD. 4,000,000 for short-term money market investment and wants to make a profit based on the following rates. Explain specific steps that Jack Ma must take to make a covered interest arbitrage. CAD= Canadian Dollar JYP= Japanese Yen 6-month Canadian interest rate 1.6% per annum 6-month Yen interest rate 2.95% per annum Spot rate JYP 93.1395/CAD 6-month forward rate JYP 93.8380/CADAssume the Canadian dollar rose from US$0.9475 to US$0.9875. A client owns an investment that pays 6% interest in US dollars. What is the client's addition rate of return in US dollars? 4.05% 0.00% 1.78% 4.22%For each of the following events/items, state whether the impact is positive(+), negative (-) or no impact (0). a) A Malaysian company borrows in Euros from Deutsche Bank. The loan is repayablein six months. The Ringgit appreciates against the Euro. b) What happens if the loan in (a) above is repayable in one lump sum in five yearsfrom now and the Euro now appreciates against the Malaysian Ringgit? c) A Malaysian mutual fund invests in an Australian ETF (exchange traded fund). TheAustralian Dollar appreciates against the Malaysian Ringgit.
