Prevent covered interest arbitrage

Reference no: EM13534054

If the interest rate in the Japan is 5%, the interest rate in the U.S. is 10%, the spot exchange rate is 120 Japanese yens per U.S. dollar, what must be the forward exchange rate to prevent covered interest arbitrage?
The inflation rate in the U.S. is projected at 6% per year for the next several years. The Australian inflation rate is projected to be 2% during that time. The exchange rate is currently A$2.2. Based on relative purchasing power parity, what is the expected exchange rate in two years?

The British pound trades at $1.9735 in London and $1.9684 in New York. How much profit could you earn on each trade with $10,000?

Reference no: EM13534054

Questions Cloud

The price-earnings ratio : The most common valuation multiple is the price-earnings ratio

Find the velocities of both cars at the instant : The racer decides to race against a stock car. Both start from rest. The stock car leaves 1.0 sec before the race car. Find the velocities of both cars at the instant they are side by side

Valuing available-for-sale securities at fair value : the cost of the available-for-sale securities was $62,400, and the fair value was $56,900. Prepare the adjusting entry to record the unrealized gain or loss for available-for-sale securities on December 31, 2012.

Calculate the recoil speed of the nucleus : The nucleus of the polonium isotope 214^po (mass 214u ) is radioactive and decays by emitting an alpha particle, what is the recoil speed of the nucleus that remains after the decay

Prevent covered interest arbitrage : What must be the forward exchange rate to prevent covered interest arbitrage?

Calculate how much time elapses from start to stop : An electric vehicle starts from rest and accelerates at a rate of 2.4 m/s2 in a straight line until it reaches a speed of 25 m/s. How much time elapses from start to stop

Determine the depreciation for the current fiscal year : Determine the depreciation for the current fiscal year and for the following fiscal year by (a) the straight-line method and (b) the double-declining-balance method.

Mated with a hen of the same phenotype. : A rooster with gray feathers is mated with a hen of the same phenotype. Among their offspring, 15 chicks are gray, 6 are black, and 8 are white. What is the simplest explanation for the inheritance of these colors in chickens? What offspring would yo..

What is the amount of the annual depreciation : What is the amount of the annual depreciation and what is the book value at the end of the twenty-fourth year of use?

User Account

All Pages