Rate between usd and ghs be quoted to avoid arbitrage

Assignment Help Financial Management
Reference no: EM132070885

a) The exchange rate between the Ghana cedi (GHS) and the United States Dollar (USD) on Friday 24th June 2017 is 1 USD to 4.4450. The 6months interest rate for GHS is 12.9% whilst that of USD is 1.78%. How should the 6 months rate between USD and GHS be quoted to avoid arbitrage?

b) A company expects to pay USD 1m in 6months time for goods it is importing from China and is looking to hedge its exchange rate risk. Is it prudent for the company to buy USD 6months forward? Advice the company.

c) The Treasurer of this company has heard that a new bank that has opened in Ghana offers Risk management products that can help him hedge its foreign exchange rate risk. He however lacks understanding and has contacted you for advice. Explain three derivative products he can use to hedge its foreign exchange rate risk.

Reference no: EM132070885

Questions Cloud

What is the sustainable growth rate : What is the sustainable growth rate? (Do not round intermediate calculations. Round your answer to 2 decimal places.
Price necessary assuming all other factors are unchanged : Medicare and Medicaid presently account for 50% of the volume. What is the new price necessary assuming all other factors are unchanged?
Evaluate the websites search engine : Evaluate the Website's search engine. Discuss at least two advantages and disadvantages of a customized search engine.
Finance international trade and investment : Discuss the sources of funds to finance international trade and investment.
Rate between usd and ghs be quoted to avoid arbitrage : How should the 6 months rate between USD and GHS be quoted to avoid arbitrage?
What is usually the cause of large tsunamis : What is usually the cause of large tsunamis? Which THREE of the following are true regarding numbers of earthquakes annually
Determining the success of each metric : It was not decided the indicators to be used for determining the success of each metric and your input has been requested.
Understanding of the various financial instruments : Have an understanding of the various financial instruments available to the potential investor.
Reducing the price of health care : The focus in health care reform is cost control in light of annual double-digit inflation since the late 1990s and the consumption of nearly 17% of the gross

Reviews

Write a Review

Financial Management Questions & Answers

  What is the net income at the current level of sales

Melloroid Company currently has sales of $680,000. Variable expenses are 35% of sales. what is the net income at the current level of sales?

  Permanent debt and uses the proceeds to repurchase shares

Suppose Gartner adds $48 million in permanent debt and uses the proceeds to repurchase shares. What will Gartner's levered value be in this case?

  Calculate macaulay duration and modified duration

Corporate US Bonds 2% payable annually on a nominal value of $1,000 and maturing in 4 years. Calculate Macaulay duration-Modified duration.

  Investors holding bonds bear interest rate risk.

Investors holding GP bonds bear interest rate risk. Interest rates have fallen since GP sold these bonds to the public.

  Firms stock price fails to meet shareholders expectations

What are some actions an entrenched management might take that would harm shareholders? How is it possible for an employee stock option to be valuable even if the firm’s stock price fails to meet shareholders’ expectations?

  What price would you have margin call

At what price would you have a margin call if you were wrong, and the price went up? 25% as the Maintenance Margin.

  Deposited into this guaranteed account to fully fund

how much money should be deposited into this guaranteed account to fully fund this request?

  Small to medium enterprise-multi-national enterprise

Discuss at least two (2) specific financial theories that can be utilized to improve a firm or institution’s efficiency or operations. This may include a Small to Medium Enterprise (SME) or a Multi-National Enterprise (MNE).

  Pay for phone and interest rate on your saving account

Suppose that you do have money to pay for the phone and the interest rate on your saving account is 0.2%. Which is a better deal for you? Why?

  Statements about the payback method

Which one of the following statements about the payback method is not true?

  Call protection-callable bond outstanding on the market

Fooling Company has a 10 percent callable bond outstanding on the market with 25 years to maturity, call protection for the next 10 years, and a call premium of $100. What is the yield to call (YTC) for this bond if the current price is 108 percent o..

  Sale necessary for the company to pay underwriter spread

What are the required proceeds from the sale necessary for the company to pay the underwriter's spread?

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