Determine the yield to investor

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Reference no: EM131994061

1. You observed the bid rate of the New Zealand dollar is $.3232 while the ask rate is $.3245 at Bank X. The bid rate of a New Zealand dollar is $.3324 while the ask rate is $.3342 at Bank Y. What would be your dollar amount profit if you use $1,000,000 to execute locational arbitrage?

2. What are the four major types of firm in the U.S, how are they defined, and what are the key differences between them?

3. Today, the one-year U.S. interest rate is 2.53%, while the one-year interest rate in Mexico is 6%. The spot rate of the Mexico peso (MXP) is $.08 The one-year forward rate of the MXP exhibits a 11% discount. Determine the yield (percentage return on investment) to an investor from Mexico who engages in covered interest arbitrage.

Reference no: EM131994061

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