International fisher effect

Assignment Help Financial Management

Reference no: EM131937950

The U.S. three-month interest rate (unannualized) is 1%. The Canadian three-month interest rate (unannualized) is 4%. A put option with a three-month expiration date on Canadian dollars is available for a premium of $0.02 and a strike price of $0.62. The spot rate of the Canadian dollar is $0.65. Assume that you believe in International Fisher Effect (IFE). Forecast the dollar amount of your profit or loss from buying a put option contract specifying C$100,000. Forecasr the USD received by A&M company which uses the put option to hedge against its 3 month receivables of C$ 100,000.

Reference no: EM131937950

Questions Cloud

Particular delivery price and delivery date be created : How can a forward contract on a stock with a particular delivery price and delivery date be created from options?

Why does information security use a top-down approach : Describe the risk assessment process and how to design response plans. Why does information security use a top-down approach?

Determining the psychologically disordered : Psychological disorders are often not apparent to others, and many people with these problems seem to live basically normal lives and are not a threat to others

What procedures would a cognitive therapist : What procedures would a cognitive therapist use to help your friend overcome his negative feelings?

International fisher effect : The Canadian three-month interest rate (unannualized) is 4%. Assume that you believe in International Fisher Effect (IFE).

Develop an annotated bibliography on contemporary approaches : Psy410 Bibliography Include 8-10 sources on contemporary approaches to treatment based on current research and theoretical models.

What circumstances should the company take on project : Under what circumstances should the company take on the project?

What a successful policy document might look like : Rather, it is designed merely to reflect what a successful policy document might look like in any given workplace.

Write compliance policy for an acute hospital in accordance : Write Compliance Policy for an acute hospital in Accordance with Clinical Coding Compliance and Indiana

User Account

All Pages