Question 22 choices? $34,270.00 or €26,990.63 $30,798.96 or €24,256.88 $49,216.8

Question

Question 22 choices? $34,270.00 or €26,990.63 $30,798.96 or €24,256.88 $49,216.87 or €38,762.60 $17,577.45 or €13,843.78 $22,318.09 or €17,577.45 The Dollar to Euro spot exchange rate is $1.5123/1.00, the Dollar to Yen spot exchange rate is $0.009615/¥1.00, and the Euro to Yen spot exchange rate is 0.006256/1.00. Determine the triangular arbitrage profit that is possible if you have $9,000,000. Question 19 options $144,198 30,231 $29,314 $146,546 $254,989 Suppose that the one-year interest rate is 6.81% in the United States, the spot exchange rate is $1.4386/1.00, and the one-year forward exchange rate is $1.4084/e1.00. Based on interest rate parity, what must the one-year interest rate be in the euro zone? Question 21 options: 2.144% 15.652% 12.285% 9.100% 4$68% 8341% A currency dealer can borrow $1,490,000 (or the equivalent in euros) for one year. The one-year interest is 3.50% in the U.S. and 5.80% in the euro zone. The spot exchange rate is S1.2794/e1.00 and the one- forward exchange rate is S1.2697/1.00. What arbitrage profit results if the trader borrows the maximum available funds? Question 22 options: $34,270.00 OR 26,990.63 30,798.96 OR 24,256.88 $49,216.87 OR 638,762.60 BPrint Layout View Sec1 Pages: 3 of 4Words: 656 of1 25 MacBo

Explanation / Answer

a. dollar to Euros = 9,000,000/1.5123

euros to yen = 9,000,000/1.5123 * 1/0.006256

yen to USD = 9,000,000/1.5123 * 1/0.006256 * 0.009615 = 9,146,545.64

profit = 146,546

b. 1.4386 * 1.0681/(1+r) = 1.4084

r = 9.100%

c. USD to Euros = 1,490,000/1.2794

amount in Euros in a year = 1,490,000/1.2794 * 1.058

amount in USD = 1,490,000/1.2794 * 1.058 * 1.2697 = 1,564,468

profit = 1,564,468 - 1,490,000*1.035 = 22,318.09

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.