Computing forward rate, Investing $1,000,000 for six

Computing forward rate

Assignment Help Finance Basics

Reference no: EM1363544

Investing $1,000,000 for six months. Considering purchasing US T Bills at 1.810% (6 month rate, not annual), matures in 26 weeks. Spot Exchange Rate is $1.00/Yen100, six month forward rate is $1.00/Yes110, Interest rate in Japan is 15%.

I think I should Take the $1m, translate into yet at spot, invest in Japan, hedge with a forward contract because it doesn't mature to 26 weeks and I want to protect my investment with a interest in Japan at 13%.

I really think the interest rate in Japan should be 7.45% before I consider the investment.

Not sure if I'm on the right track.

Reference no: EM1363544

Questions Cloud

Write function compute square root together with prototype : Write a C++ function called compute together with its prototype that is passed 2 integers, A and B and returns the square root of A2+B2 ,as a double.

Descussing the alternate ftc analysis : Discuss the alternate FTC analysis that is applied to such cases if they are suspect but not found to be per se illegal.

Determining bond retirement : Prepare journal entries to record the following retirement. (Show computations and round to the nearest dollar). The December 31, 2010 balance sheet of Wolfe Co. included the following items:

Calculate forward rates : Given following spot rates for various periods of time from today, calculate forward rates from years one to two, two to three, and three to four.

Computing forward rate : Investing $1,000,000 for six months. Planning purchasing US T Bills at 1.810% six month rate, not yearly, matures in 26 weeks. Spot Exchange Rate is $1.00/Yen100,

Gains and loss in corporation : Does a corporation recognize a gain or loss when it distributes property as a dividend or in a redemption? My text just goes on and on regarding these topics. Is there a reference on the above that is more concise?

Find the magnitude of the resultant : plan a vector to represent each of the two teams. find the magnitude of the resultant.

Program to ask how many games are being purchased : Your program should ask the store clerk how many games are being purchased and calculate a total due (with 6% tax). The total number of games, the discount amount.

Amortization expense for the patent : Lexicon Corporation purchased a patent for $600,000 on January 2, 2001, at which time the patent had an estimated useful life of ten years.

User Account

All Pages