User Account

All Pages

Calculate the amount of arbitrate profit or loss equivalent

Assignment Help Macroeconomics
Reference no: EM132415118

Mr. Bernard specializes in cross-rate arbitrage. He notices that the current spot exchange rate is RM4.10/USD and the one-year forward exchange rate is RM4.20/USD. The one-year interest rate is 2.5% in Ringgit and 2.2% in US Dollars. Mr. Bernard is able to borrow RM1, 000,000 or an equivalent amount of USD243, 902.44 at the current spot exchange rate.

Required:

a) If Mr. Bernard is a Malaysian-based investor, is there a guaranteed profit from covered interest arbitrage? Calculate the amount of arbitrage profit or loss

b) Assume that Mr. Bernard is a US Dollar-based investor, determine the arbitrage process and calculate the amount of arbitrate profit or loss equivalent to the US Dollar.

Reference no: EM132415118

Questions Cloud

Discuss challenges that a would-be statesmanship would face : Discuss statesmanship as it relates to financial management in the public administration context. Discuss the challenges that a would-be statesmanship would.
Categories of transactions in the balance of payments : What are the three categories of transactions in the balance of payments? Give an example of each
Describe the ethical defensibility in brief : Read the article titled "Ethical Defensibility: Should an Officer's ‘Willingness to Deceive' Result in Automatic Certification Revocation?".
What is the impact of an increase in k 0 : He asks you to donate part of your business' capital stock to Ghana in order to increase its national income.
Calculate the amount of arbitrate profit or loss equivalent : Assume that Mr. Bernard is a US Dollar-based investor, determine the arbitrage process and calculate the amount of arbitrate profit or loss equivalent to the US
How you would integrate each component into security program : Describe the how you would integrate each of these components into the security program. Format your assignment consistent with APA guidelines.
Calculate export price of alaso in us dollar : At the beginning of year, calculate export price of Alaso in U.S dollar. Assuming purchasing power parity holds, what should the exchange rate be at the end
How did isis emerge and why did it become so powerful : Using the resources from class as well as any additional resources from the Internet: write a two-page essay on ISIS and its role in conflicts in Iraq and Syria
Doubling time for india per capita real gdp : Compute the doubling time for India's per capita real GDP. What will be the per capita real GDP?

Reviews

Write a Review

Macroeconomics Questions & Answers

  Country economic performance

The assumption is that if economic growth is higher, then the country's economic performance is better.

  Calculate the market equilibrium price and quantity

A firm invents and obtains a patent for a new strong, biodegradable fabric that is used to makegrocery bags. The demand function for these bags is Q = 800 - p.

  Monetarists on the philip curve

What were the arguments by the rational expectation monetarists on the Philip's curve?

  Demand for labor in the markets inelastic or elastic

Given the following info, indicate whether you would expect the demand for labor in the markets inelastic or elastic. Explain why.

  Government spending rises

Life has become yet more complicated. Government spending works with a distributed lag. Now when $1 billion is spent today, GDP increases by $1 billion this period and $1.5 billion next period. a. What happens to the path of GDP if government spe..

  Develop a comprehensive model of transaction

Oliver Williamson built on Coase, Alchian, and Demsetz, and others to develop a comprehensive model of transaction cost economics.

  Uniform pricing monopolist

Given an inverse demand function:  P = a - bQ; where a = 170, b = 1, and the short-run cost function is C(Q) = eQ + f, where e = 30 and f = 200, if the monopolist is maximizing profit:

  Should the fda regulate prescription drug importation

Should the FDA regulate prescription drug importation? Why or Why not? Take a side and remember to be specific in supporting your position.

  Print function that prints the address

Supply a member function comes_before that tests whether one address comes before another when the addresses are compared by postal code.

  Explain how can these limits to reimbursement

Explain how can these limits to reimbursement be viewed as the exercise of monopsony power.

  What is the fiscal and montery policy actions

What is the fiscal and montery policy actions in saudi arabia since the start of the global financial crisis

  Good incentive payment scheme

This year, each point brings £75; next year, it will be £120. Do you think this is a good incentive payment scheme?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd