Assuming there is no forward market in ringgit

Assignment Help Financial Management

Reference no: EM131860554

Your bank is working with an American client who wishes to hedge its long exposure in the Malaysian ringgit. Suppose it is possible to invest in ringgit but not borrow in that currency. However, you can both borrow and lend in U.S. dollars.

a. Assuming there is no forward market in ringgit, can you create a homemade forward contract that would allow your client to hedge its ringgit exposure?

b. Several of your Malaysian clients are interested in selling their U.S. dollar export earnings forward for ringgit. Can you accommodate them by creating a forward contract?

Reference no: EM131860554

Questions Cloud

Calculating the greatest common divisor : CMPT 340-T1 - Write a math definition for Euclid's algorithm for calculating the greatest common divisor of two non-negative integers, and use equational reason

Dollar transaction exposure in dollar terms : What is Rolls-Royce’s dollar transaction exposure in dollar terms? In pound terms?

According to its director of export marketing : According to its director of export marketing, this simple strategy eliminates all its currency risk. Is he right? Why?

Discuss the possible consequences of the omission : Discuss and give an example when it might be appropriate to omit explanations from your instructions. Then, discuss the possible consequence(s) of the omission.

Assuming there is no forward market in ringgit : Assuming there is no forward market in ringgit, can you create a homemade forward contract that would allow your client to hedge its ringgit exposure?

Research to guide how we deal with climate change : Climate change is a highly debated topic, but there does not seem to be a simple solution. I believe we should rely on science and research to guide.

Maturity risk premium on the two-year treasury security : What is the maturity risk premium on the 2-year Treasury security?

Compare and contrast the change interventions : In a two- to three- page paper (not including the title and reference pages) select a, b, or c from the list below and compare and contrast the change.

Would an athlete be a good prospect for entrepreneurship : Are there any similarities between the characteristics demanded of an entrepreneur and those of a professional athlete?

User Account

All Pages