Suppose that you are a currency speculator, based in the U.S., attJanuary 1st, the spot rate for the Canadian dollar is $0.68. This ishave C$160,000.00 to use on these positions.Suppose that on February 10th, the Canadian dollar depreciates (aIn order to purchase C$160,000.00 in spot market, you will need$107,200.00 alize on a possible depreciation of the Canadian dollar (C$). Ont which futures contracts for Canadian dollars are being sold. You$139,360.00$128,640.00$150,080.00d) to $0.67 in the spot market.(U.S. dollars) for the exchange. Suppose that you are a currency speculator, based in the U.S., attempting to capitalize on a possible depreciation of the Canadian dollar (C$). OnJanuary 1st, the spot rate for the Canadian dollar is $0.68. This is also the price at which futures contracts for Canadian dollars are being sold. Youhave C$160,000.00 to use on these positions.Suppose that on February 10th, the Canadian dollar depreciates (as you speculated) to $0.67 in the spot market.In order to purchase C$160,000.00 in spot market, you will need(U.S. dollars) for the exchange.

To calculate the amount of US dollars needed to purchase C$160,000.00 in the spot market, we can use…

Answered: Suppose that you are a currency…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Suppose that you are a currency speculator, based in the U.S., attempting to capitalize on a possible depreciation of the Canadian dollar (C$). On January 1st, the spot rate for the Canadian dollar is $0.68. This is also the price at which futures contracts for Canadian dollars are being sold. You have C$160,000.00 to use on these positions. In the previous parts of this question, your sold a futures contract for Canadian dollars that will let you receive $108,800.00 for (C$160,000.00) on March 10th. When the Canadian dollar depreciated to $0.67 you purchased C$160,000.00 for $107,200.00 on February 10th. In total, after the futures contract you sold settles, you will have incurred a loss from these positions totalling $
Suppose that you are a currency speculator, based in the U.S., attempting to capitalize on a possible depreciation of the Canadian dollar (C$). On January 1st, the spot rate for the Canadian dollar is $0.47. This is also the price at which futures contracts for Canadian dollars are being sold. You have C$360,000.00 to use on these positions. In the previous parts of this question, your sold a futures contract for Canadian dollars that will let you receive $169,200.00 for (C$360,000.00) on March 10th. When the Canadian dollar depreciated to $0.46 you purchased C$360,000.00 for $165,600.00 on February 10th. In total, after the futures contract you sold settles, you will have ________________ from these positions totalling ________$ .
Assume that you are a Canadian living in Canada, and have $1,000CDN and you are debating about where to invest it for one year: in Canada or in the USA. Currently, the market interest rate in Canada (icAN) is 2.70% and in the USA, the market interest rate (jus) is 3.75%. The current exchange rate is $1.3107USD= $1CAD. The spot exchange rate (R) has US currency in the denominator and Canadian currency in the numerator. The forward exchange rate (F) is the spot exchange rate one year from now. Using above information, complete the below statements, filling in your final, complete answer in the space/box provided to the right of the statement. Do not show your work.
You are a currency trader specializing in the Japanese yen, and you are confident that the spot exchange rate will be *118 per dollar in six months based on your analysis. The current spot exchange rate is 123 per dollar, and the six-month forward rate is 113 per dollar. Assume that you would like to buy or sell *100,004,000. Use direct quotes in your calculations. Enter the numeric portion of your answer without the currency symbols. Required: a-1. How should you speculate in the forward market to make a profit? a-2. What is the expected dollar profit from speculation? b. What would be your speculative profit in dollar terms if the spot exchange rate turns out to be ¥117 per dollar in six months? Complete this question by entering your answers in the tabs below. Req A1 Answer is complete but not entirely correct. Req A2 Req B What would be your speculative profit in dollar terms if the spot exchange rate turns out to be X117 per dollar in six months? Note: Round intermediate…
Suppose 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 USD
today you notice the following exchange rate quotations. $1 is equal to 4.08 Argentine pesos. 1 Argentine peso = 0.44 Canadian dollars. You need to purchase 3251 Canadian dollars with U.S dollars. How many U.S dollars will you need for your purchase? (Do not round intermediate calculations and enter your answer rounded to 2 decimal places)
You are the financial manager for Belltower Associates, which is headquartered in Australia. You have received the below spot and interest rates quotes from your bank: Bid Ask NZD 0.8298/AUD NZD 0.8340/AUD 4.50% 5.00% 0.90% 1.30% Spot exchange rate Interest rate for AUD Interest rate for NZD Suppose that Belltower Associates has a receivable in NZD in one year's time and they wish to engage in a hedge to lock in their domestic (i.e. Australian dollar) currency equivalent of its value. Belltower Associates intends to achieve this by using their bank's spot rates and money market interest rates in order to create a synthetic forward contract. What is the effective forward exchange rate that Belltower Associates is able to achieve for hedging the AUD value of their NZD receivable? O a. NZD 0.8012/AUD O b. NZD 0.8635/AUD O c. O d. O e. NZD 0.8298/AUD NZD 0.8594/AUD NZD 0.7974/AUD NZD 0.8085/AUD
Suppose that you are a currency speculator, based in the U.S., attempting to capitalize on a possible depreciation of the Canadian dollar (C$). On January 1st, the spot rate for the Canadian dollar is $0.68. This is also the price at which futures contracts for Canadian dollars are being sold. You have C$160,000.00 to use on these positions. On January 1st, you sell a futures contract specifying C$160,000.00 at $0.68 per Canadian dollar with a March 10th settlement date. On the settlement date, you will (U.S. dollars) in exchange for the C$160,000.00.
Please use this information to answer the question below. A US firm's expected Accounts Receivables from Canada due in 90 days Current Spot Rate (SR) for CAD The 90-day Forward Rate for CAD If the US firms uses a forward hedge, estimate the cost of hedging the receivable if the spot rate for CAD 90 days later turns out to be $0.65 O $100,000 O Ⓒ$60,000 CAD 2,000,000 $0.70 $0.68 O 4
The foreign exchange department of Bank of America has a bid quote on Canadian dollars (C$) of C$0.9720/$. If the bank typically tries to make a bid-ask spread of 0.5 percent on these foreign exchange transactions, what will the ask rate have to be? (Round answer to 2 decimal places, e.g. 52.75.) The ask rate has to be C$ enter the ask rate rounded to 2 decimal places /$
Assume the exchange rates in New York for $1 are C$1.1382 and £.6387 while in Toronto, C$1 will buy £.5612. How much profit can you earn on $10,000 using triangle arbitrage?
Suppose that you are a finance manager at a U.S. based MNC. On January 1st, you anticipate you will need to purchase C$170,000.00 (Canadian dollars) worth of supplies from a Canadian supplier in March using Canadian dollars (C$). The current spot rate for the Canadian dollar is $0.73. In order to lock in spot rate for this exchange, you purchase a futures contract specifying C$170,000.00 at $0.73 per Canadian dollar with a March 10th settlement date. On the settlement date, your MNC will need to pay (U.S. dollars) for the C$170,000.00.

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