Find out the usd-sgd forward exchange rate

Assignment Help Financial Management
Reference no: EM131340657

Consider the following quotes for USD/SGD (amount of SGD per 1 USD) spot and forward premia from a foreign exchange dealer.

Spot rate: 1.4050-1.4065

6 month forward premium: 2.80%

As an importer, you want to hedge your 1-year foreign exchange exposure by selling the USD forward. Apply the theories of exchange rate determination to find out the USD/SGD forward exchange rate that the dealer will bid you.

Reference no: EM131340657

Questions Cloud

The price of the call option and price of the put option : Aloha Beach Bum specialises in beachwear. Its current stock price is $28. There is a liquid market for Aloha’s options and both calls and puts are available for trading. The call strike price is $28 while the put strike price is $29. Apply binomial m..
Estimate the spot size of the fiber mode : Derive the eigenvalue equation (2.2.33) by matching the boundary conditions at the core-cladding interface of a step-index fiber.
Determine the carrying value of the investment in nutro inc : In November 2004, Dolo Inc sold inventories to Nutro Inc for the first time.- Determine the carrying value of the investment in Nutro Inc as at 31 December 2004.
What would you choose as your method of presentation : What would you choose as your method of presentation (e.g., lecture format, informal question & answer session, hybrid of more than one method, etc.)? Explain why would you choose that method.
Find out the usd-sgd forward exchange rate : Consider the following quotes for USD/SGD (amount of SGD per 1 USD) spot and forward premia from a foreign exchange dealer. As an importer, you want to hedge your 1-year foreign exchange exposure by selling the USD forward. Apply the theories of exch..
In the two-period model-suppose household income : In the two-period model, suppose a household's income in the first period is $40,000, income in the second period is $50,000, and the real interest rate is 25 percent. A sudden shock changes the household's income to $45,000 and income in the second ..
What is the optimal size of the production run : a) What is the optimal size of the production run? units (round your response to the nearest whole number). b) What is the average holding cost per year?
Calculate the standard deviation of tim portfolio : You are given the year-on-year expected return on two stocks, TechCo and RetailCo, which are 4.2% and 1.8% respectively and their corresponding annualized standard deviations are 12.5% and 15%. Calculate the standard deviation of Tim’s portfolio.

Reviews

Write a Review

Financial Management Questions & Answers

  Credit risk file based on different types of loans

Describe how to apply stratified sampling to sample from the Credit Risk file based on the different types of loans. Implement your process in Excel to choose a random sample consisting of 10% of the records for each type of loan.

  Calculate a table of interest rates

Calculate a table of interest rates for 5 years based on the following information: 1. The pure interest rate is 2% 2. Inflation expectations for year 1 = 3%, year 2 =4%, years 3-5 =5% 3. The default risk is .1% for year one and increases by .1% over..

  Compare the cross exchange rate with the direct rate

Determine the cross exchange rate between the Japanese yen and the Australian dollar. Compare the cross exchange rate with the direct rate. Are there any differences? Evaluate the significance of your results.

  Research efficient market hypothesis-theory of reflexivity

Research Efficient Market Hypothesis and the Theory of Reflexivity; formulate your own thoughts as to which one you believe is the true nature of markets. Take in consideration all the bubbles in the stock & housing markets you have seen.

  Taxes reported on the income statement

Bullseye, Inc.'s 2008 income statement lists the following income and expenses: EBIT = $905,000, Interest expense = $92,500, and Net income = $577,500. What is the 2008 Taxes reported on the income statement?

  Risk-free rate for all maturities

The spot price of an investment asset that provides no income is $30 and the risk-free rate for all maturities (with continuous compounding) is 10%. Show all work. What, to the nearest cent, is the three-year forward price? Assume that the asset prov..

  After the recapitalization

Langley Longboards has $10 million in total assets with a debt to capital ratio of 0.20. Langley’s beta is currently 1.35, and its tax rate is 40%. Langley is considering retiring all of their debt to eliminate their financial risk, after the recapit..

  Analyzing and explaining the effects of a stock split

On March 1 of the current year, Zhang Company has 500,000 shares of $20 par value common stock that are issued and outstanding. Its balance sheet shows the following account balances relating to common stock. How many shares of common stock are issue..

  What is the profitability index of project

Scrooge Inc. has two mutually exclusive projects available whose cash flows are: Year 0 1 2 3 4 5 Project A -20,000 12,000 8,000 6,000 4,000 2,000 Project B -20,000 9,000 6,000 6,000 8,000 6,000 The required rate of return is 14% What is the NPV of P..

  Absolute forecast error as percentage of realized value

In Period 1, the predicted value of the Mexican peso was $0.13 and the realized value was $0.14. In period 2 the predicted value was $0.14 and the realized value was $0.12. In period 3, the predicted value was $0.13 and the realized value was $0.15. ..

  Equipment will be depreciated straight line

Better Mousetraps has developed a new trap. It can go into production for an initial investment in equipment of $6.3 million. The project will come to an end in 6 years., when the trap becomes technologically obsolete. The firm’s tax bracket is 35%, ..

  Transactions expenses by netting intra company debt

Trident Europe, the German subsidiary of a U.S. company, has €15,000,000 in accounts receivable for sales billed to customers on terms of 2/30 n/60. Customers usually pay in 30 days. Trident Europe also has €9,000,000 of accounts payable billed to it..

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