Required: Calculate the contribution to total performance from currency, country, and stock selection for the manager in the example below. All exchange rates are expressed as units of foreign currency that can be purchased with 1 U.S. dollar. (Do not round intermediate calculations. Round your percentage answers to 2 decimal places. Input all amounts as positive values.) Europe Australasia Far East EAFE Weight 0.60 0.10 0.30 Return on Equity Index 20% 18 25 Profit/Loss Currency Selection % relative to EAFE Country Selection % relative to EAFE Stock Selection % relative to EAFE E1/E 1.10 0.50 1.30 Manager's Weight Manager's Return 0.48 18% 0.20 16 0.32 16
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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).Calculate the contribution to total performance from currency, country, and stock selection for the manager in the example below. All exchange rates are expressed as units of foreign currency that can be purchased with 1 U.S. dollar. (Do not round intermediate calculations. Round your percentage answers to 2 decimal places. Input all amounts as positive values.) EAFE Weight Return on Equity Index E1/E0 Manager's Weight Manager's Return Europe 0.40 16% 0.90 0.55 17% Australasia 0.50 16 1.30 0.12 20 Far East 0.10 21 1.10 0.33 20Based on the information provided in the table below, calculate the contribution to total performance from currency, country and stock selection for the manager. All exchange rates are expressed as units of foreign currency that can be purchased with 1 U.S. Dollar. EAFE Weight Return on Equity Index (%) Currency Appreciation E1 / E0 - 1 Manager’s Returns Manager’s Weight (%) Europe 0.3 10 10 0.35 8 Australia 0.1 5 -10 0.10 7 Far East 0.6 15 30 0.55 18
- The table below contains the average returns, standard deviation of returns and correlation of returns with US indexfor different countries. All data are in US dollar terms. The US T-Bill rate is 3%. Determine which of thesecountries are suitable for a US based investor to diversifv into. Show the necessarv calculationsUS T-Bill Rate %3Assuming the following quotes: Citibank quotes U.S. dollars per pound at $1.5400/£ National Westminster quotes euro per pound at €1.6000/£ Deutsche bank quotes dollars per euro at $0.9700/€ Is there an arbitrage opportunity based on these quotations? If so, show how a market trader with one million $ (1,000.000 $) can make an inter-market arbitrage profit, and calculate that profit.Assume the following information: Quoted Price Value of Canadian dollar in U.S. dollars $.90 Value of New Zealand dollar in U.S. dollars $.30 Value of Canadian dollar in New Zealand dollars NZ$3.02 Given this information, is triangular arbitrage possible? If so, explain the steps that would reflect triangular arbitrage, and compute the profit from this strategy if you had $1,000,000 to use. What market forces would occur to eliminate any further possibilities of triangular arbitrage? a) Diamond Bank expects that the Singapore dollar will depreciate against the dollar from its spot rate of $.43 to $.42 in 60 days. The following interbank lending and borrowing rates exist: Lending Rate Borrowing Rate U.S. dollar 7.0% 7.2% Singapore dollar…
- Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $20,000 to invest, and the current exchange rate is $2/£.Suppose now the investor also sells forward £10,000 at a forward exchange rate of $1.95/£. Required:a. Calculate the dollar-denominated returns for each scenario. (Round your percentage answers to 2 decimal places. Negative amounts should be indicated by a minus sign.)Please show complete steps and correct. Suppose a U.S. investor wishes to invest in a British firm currently selling for £40 per share. The investor has $12,000 to invest, and the current exchange rate is $2/£. Suppose now the investor also sells forward £6,000 at a forward exchange rate of $2.10/£. Calculate the dollar-denominated returns for each scenario. (Round your answers to 2 decimal places. Negative amounts should be indicated by a minus sign.).You have the following quotations for the Chinese yuan (CNY) and the Australian dollar (A$) at the HSBC Bank in China and National Australia Bank in Australia. Can you make a locational arbitrage profit? If yes, calculate the arbitrage profit if you have A$1.76 million or CNY3.42 million. (enter the whole number without sign or symbol) Currency HSBC in China National Australia Bank in Australia Bid Ask Bid Ask Chinese yuan A$0.2010 A$0.2230 A$0.2420 A$0.2673 Australian dollar CNY4.4221 CNY4.9632 CNY3.8255 CNY4.1641
- ABC Bank quotes the following for the British pound and the New Zealand dollar: Quoted Bid Price Quoted Ask Price Value of a British pound (£) in $ $1.61 $1.62 Value of a New Zealand dollar (NZ$) in $ $.55 $.56 Value of a British pound in New Zealand dollars NZ$2.95 NZ$2.96 Assume you have $10,000 to conduct triangular arbitrage. What is your profit from this strategy? What is your profit?A commercial Bank in Zambia has a net profit after taxes of K10 million with an asset base of K100 million. It is also noted that the equity capital investment for the bank amounts to K20 million. Based on the foregoing, calculate the Return on Equity (RoE) and Return on Assets (RoA). Ensure to also comment on the relationship between the two performance parameters ROE and ROA. Distinguish between the short run and long run determinants of exchange rate volatility. In your assessment show how the exchange rate movements can influence the Interest Parity ConditionPortfolio Ltd., a company based in Munich, has foreign trading assets in three major currencies, JPY, USD, and GBP. Bayes has a short position of JPY 720 million, a long position of USD 7.7 million, and a long position of GBP 6.3 million. Daily observations for the last 12 months show that the spot rates’ standard deviations are 0.5% for both EUR/JPY and EUR/GBP and 1% for EUR/USD. The correlation between EUR/JPY and EUR/GBP is +50%, between EUR/JPY and EUR/USD is +40%, and between EUR/USD and EUR/GBP is +60%. What is the risk (VaR) of the overall position over a 5-day interval at the 95% confidence level? Assume 0.90 GBP = 1 EUR, 1.1 USD = 1 EUR and 120 JPY = 1EUR