Find what is your profit, Do you buy or sell £1,000,000 in

Find what is your profit

Assignment Help Corporate Finance

Reference no: EM1343810

the £/$ spot rate is £1.00/$1.80 and the 1-year forward rate is also £1.00/$1.80. You expect the spot £/US$ rate to be £1.00/$1.65 in 1-year's time. You have $ 1,000,000 to speculate with.

1. Do you buy or sell £1,000,000 in the forward market? If so, why?

2. Find what is your profit in £s if you are correct and the spot rate is £1.00/US$1.65 in a year's time?

3. Find what is your profit or loss in £s if you are wrong and the spot rate is £1.00/$2.00?

Reference no: EM1343810

Questions Cloud

Accounting decision to select lifo : Explain how would the following ratios be affected by the accounting decision to select LIFO, rather than FIFO, for inventory valuation?

Find accounting break even point : We are estimating a project that costs $750,000, has an 8 year life, and has no salvage value. Suppose that depreciation is straight-line to zero over the life of the project.

How would you assess the value of this liability : Explain what questions would you raise with the CEO over the firm's litigation liability - How would you assess whether the firm should record a liability for this risk, and if so, how would you assess the value of this liability?

Js code to prompt the user for integer and print result : Write JS code which prompt the user for an integer and prints the result.

Find what is your profit : Do you buy or sell £1,000,000 in the forward market and describe what is your profit in £s if you are correct and the spot rate is £1.00/US$1.65 in a year's time?

Calculation of npv : Ang Electronics, Inc., has created a new DVDR. If the DVDR is successful, the present value of the payoff [when the product is brought to market] is $21.2 million.

Trade off theory and pecking order theory : Several theories are proposed to explain how companies deal with debt and financial distress.

Transmitting image using raster scan order : If we were to transmit this image using raster scan order, after 15 seconds how many rows of the image will the user have received?

Calculate percent change in price : Market, Inc. has a 7 year, 6% annual coupon bond outstanding with a $1,000 par value. The bond has a yield to maturity of 5.5%.

User Account

All Pages