Question 4 a. b. The Bank of England (BOE) which is the central of the UK announced th it would slow down the pace of increasing interest rate because there was sign that t labour market was slowing down. The market quote for GBP (with bid and ask) is: GBP 1.1954/1.1967 What would you do if you want to trade according to the news? State which currency you buy and which currency you sell. What is the rate you are going to deal at? (Show workings) You will need to pay a EUR bill for goods imported from Italy in 3 month You have USD and want to fix the exchange rate today by using forward. You get market quote (with bid and ask) of: Spot EUR/USD 3-month swap points 1.0655/1.0673 55.59 / 62.09 State which currency you buy and which currency you sell. What is the rate you are going to deal at? (Show workings)

Question 4 a. b. The Bank of England (BOE) which is the central of the UK announced th it would slow down the pace of increasing interest rate because there was sign that t labour market was slowing down. The market quote for GBP (with bid and ask) is: GBP 1.1954/1.1967 What would you do if you want to trade according to the news? State which currency you buy and which currency you sell. What is the rate you are going to deal at? (Show workings) You will need to pay a EUR bill for goods imported from Italy in 3 month You have USD and want to fix the exchange rate today by using forward. You get market quote (with bid and ask) of: Spot EUR/USD 3-month swap points 1.0655/1.0673 55.59 / 62.09 State which currency you buy and which currency you sell. What is the rate you are going to deal at? (Show workings)

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter6: Government Influence On Exchange Rates

Section: Chapter Questions

Problem 22QA

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Match each term in Column A with its related definition in Column B. Column A 1. ____________ Spot rate 2. ____________ Currency appreciation 3. ____________ Translation risk 4. ____________ Transaction risk 5. ____________ Exchange rate Column B a. The rate at which one currency can be traded for another currency. b. The possibility that future cash transactions will be affected by changing exchange rates. c. A month ago, 1 U.S. was worth 8.5 Mexican pesos. Today, 1 is worth 9.0 Mexican pesos. The U.S. dollar has undergone what? d. The degree to which a firms financial statements are exposed to exchange rate fluctuation. e. The exchange rate of one currency for another for immediate delivery (today).
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In order to be able to support the national currency and to achieve inflation,as it should be in the parameter(s)? And this trip, the currency is risky,What is the effect on interest risk, price risky, country profitable risk? analyze andPlease comment.Moody's rating downgraded from 'Ba' to 'B',Foreign direct investment is low,Portfolio Investments are high,Inflation rate: 15%Interest rate: 10%TL / $ = 0.2755
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Foreign Exchange Market You wish to sell US dollars against sterling and are given the following quotes from two banks. At what price will you deal? 4356/61 4358/63
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James Clark is a foreign exchange trader with Citibank. He notices the following quotes. (12’)Spot exchange rate SFr1.2051/$Six-month forward exchange rate SFr1.1922/$Six-month $ interest rate 2.5% per yearSix-month SFr interest rate 2.0% per yeara. Is the interest rate parity holding? You may ignore transaction costs.b. Is there an arbitrage opportunity? If yes, show what steps need to be taken to make arbitrage profit. Assuming that James Clark is authorized to work with $1,000,000, compute the arbitrage profit in dollars.?
H3. The Central Bank of the Bahamas pegs the Bahamian Dollar to the United States Dollar at a price of 1 BSD per USD. As an analyst for XYZ Consulting Inc., you have been asked to predict the behavior of key macroeconomic variables in the Bahamas for different policy scenarios. Using all the appropriate diagrams, your analysis must describe the Bahamian money and output markets, as well as the foreign exchange market. To perform this task, you must assume that prices are sticky: fixed in the short-run and flexible in the long-run. The scenarios are: a) A temporary restrictive monetary policy in the Bahamas. b) A temporary restrictive fiscal policy in the Bahamas.
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