Exchange rate between us dollars and euros

Assignment Help Financial Management
Reference no: EM131850178

1. The exchange rate between US dollars and Euros is currently $1.52/€. The risk free interest rate is currently 2.9% for US Dollar deposits, and 7.6% for Euro deposits. The one-year futures price of Euros is 1.3589. Is there an arbitrage opportunity?

a. Yes, buy euro futures and sell euros at 1.5200

b. no, there is no arbitrage opportunity here

c. Yes, buy euros at 1.5200 and sell euro futures

d. Impossible to answer based on information given

2. The exchange rate between US dollars and Euros is currently $1.18/€. The risk free interest rate is currently 5.5% for US Dollar deposits, and 7.3% for Euro deposits. What should the price of Euros be on a six-month forward contract?

a. 1.1907

b. 1.1920

c. 1.1885

d. 1.1950

e. 1.1694

Reference no: EM131850178

Questions Cloud

Accounting profit for each of the two years of operations : Calculate his accounting profit for each of the two years of operations. What are the consequences of the assumptions which proved to be incorrect?
What is your six-month percentage return on invested capital : Assume you hold your position for six months-then you sell all 100 of your shares for $51 per share. what is your 6-month percentage return on invested capital?
Corporate cash conversion cycles : During the Great Recession of 2008-2009, corporate cash conversion cycles typically increased in length by a significant amount.
The demands of stakeholder theory : Many managers are caught in a dilemma between a desire to maximize the value of their companies and the demands of "stakeholder theory"
Exchange rate between us dollars and euros : The exchange rate between US dollars and Euros is currently $1.18/€. What should the price of Euros be on a six-month forward contract?
The exchange rate between dollars and euros : The exchange rate between US dollars and Euros is currently $1.31/€.
Calculate required rate of return for portfolio consisting : calculate the required rate of return (%) for a portfolio consisting of 50% in ABC and 50% in XYZ.
What interest rate compounded annually would growth occur : A gift of $300 to a city grew to $99,000 in 200 years. At what interest rate compounded annually would this growth occur?
Two opportunities from which to construct portfolio : Suppose that you have $1 million and the following two opportunities from which to construct a portfolio: Risk-free asset earning 8% per year.

Reviews

Write a Review

Financial Management Questions & Answers

  What amount that bill received is subject to payroll taxes

Compute Bill’s payroll and self-employment income taxes. What amount that Bill received is subject to payroll taxes?

  What is the present value of the? winnings

Celine Dion just won a? "Name That? Tune" contest with a grand prize of ?$210,000. ? However, the contest stipulates that the winner will receive ?$80000 ?immediately, and the remainder divided equally at the end of each of the next 10 years. Assumin..

  Write a letter to the business owner

Think about a negative customer service experience you had recently. Write a letter to the business owner or the company's customer service department explaining what happened.

  Compute gain or loss in the futures market after transaction

On August 2, a securities dealer, Ms. Cindy Zaicko, responsible for a $10 million bond portfolio is concerned that interest rates are expected to be highly volatile over the next 3 months. The fund manager decides to use Treasury bond futures to hedg..

  Four-year project to improve production efficiency

Purple Haze Machine Shop is considering a four-year project to improve its production efficiency. Buying a new machine press for $390,000 is estimated to result in $150,000 in annual pretax cost savings. Calculate the NPV of this project? Should the ..

  Make any more deposit after the child turns

Your new born child will be starting college in 18 years. You expect your child's college education to cost $34,020 per year, due at the beginning of each year. How much must you set aside at the end of each year for your child to attend four years o..

  Calculate the real exchange rate

Consider the following data on USDMXN and price levels in the United States and Mexico. Calculate the real exchange rate at t=0.

  With regards to financial statement and operating indicator

With regards to financial statement and operating indicator analyses:

  Corporate wide initiative in six sigma-lean manufacturing

The company has recently completed a corporate wide initiative in six sigma/lean manufacturing.

  The required initial net working capital investment

A proposed cost-saving device has an installed cost of $658,000. The device will be used in a five-year project but is classified as three-year MACRS (MACRS Table) property for tax purposes. What level of pretax cost savings do we require for this pr..

  Which dividends are expected to grow at a rate

The last dividend paid by Wilden Corporation was $1.55. The dividend growth rate is expected to be constant at 1.5% for 2 years, after which dividends are expected to grow at a rate of 8.0% forever. The firm's required return (rs) is 11.0%. What is t..

  What is the effective cost of borrowing in case

Current practice is to factor all receivables immediately at a discount of 1.9 percent. What is the effective cost of borrowing in this case?

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!

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