Risk-free profit by engaging in forward contact

Assignment Help Financial Management
Reference no: EM131958560

Japanese Yen currently trades at 122.1 yens per dollar. The US risk free rate is 4.5%, and the Japanese risk-free rate is 2%. Three-month forward contracts on the yen are quoted at 123 yens per dollar. Describe how you might earn a risk-free profit by engaging in a forward contact. What is the arbitrage profit?

Reference no: EM131958560

Questions Cloud

Long or short forward contract to hedge currency risk : Should you long or short a forward contract to hedge currency risk? What is the the price at which you could enter into a 30-day forward contract?
Describe the selected clinical population and agency : Describe the Selected Clinical Population and Agency. Use the selected agency's Web site and related literature to conduct independent research.
Company long-short forward contract to hedge currency risk : Should the U.S. Company long or short a forward contract to hedge currency risk?
How does the author understand role played by grocery store : How does the author understand the role played by grocery store commodities for Indian migrants in the Bay Area?
Risk-free profit by engaging in forward contact : Describe how you might earn a risk-free profit by engaging in a forward contact. What is the arbitrage profit?
Rename the file newdata to olddata : What is the single command that will rename the file newdata to olddata? The file is located in /customers directory and the current directory is /root.
How a person may experience privilege : Provide a personal example of how a person may experience privilege, based on one aspect of their identity and oppression based on another.
Why is the board of directors role so important today : Why is the board of directors' role so important today? Explain the role and relationships among health care mission, vision, values, and strategic goals.
How many years would you be able to make exact withdrawal : Suppose you want to take out $100,000 per year. For how many years would you be able to make this exact withdrawal?

Reviews

Write a Review

Financial Management Questions & Answers

  What would the cost of equity be if the debt-equity ratio

What would the cost of equity be if the debt-equity ratio were 2?

  Which ratio would you use to measure wnyc profitability

Which ratio would you use to measure WNYC’s profitability?

  Importance of arithmetic-geometric-dollar weighted returns

explain the difference between and importance of arithmetic, geometric, and dollar weighted returns

  The company cost of capital for firm

The company cost of capital for a firm with a 60/40 debt/equity split, 6% cost of debt, 12% cost of equity, and a 35% tax rate would be?

  Calculate the rate of return of our retirement savings

For the first part of this plan, we need to calculate the rate of return of our retirement savings will earn until we reach our retirement age (67 years old)

  Hypothetical stock is expected to pay a dividend

A hypothetical stock is expected to pay a dividend of $12 per share in two months, in six months and in ten months. The stock price is $600, and the risk-free rate of interest is 0.55% per annum with continuous compounding for all maturities.

  Compare the financial ratios for tesla and general motors

Calculate, interpret, and compare the following financial ratios for Tesla and General Motors, based on end of fiscal year 2015 data:

  About the credit terms

Credit terms. Purchases made on credit are due in full by the end of the billing period. Many firms extend a discount for payment made in the first part of the billing period.

  Inefficient compared to modern standards

It is inefficient compared to modern standards, though, and so the company is considering replacing it.

  Coupon bond with fifteen years left to maturity

Compute the price of a 7.2 percent coupon bond with fifteen years left to maturity and a market interest rate of 10.0 percent. (Assume interest payments are semiannual.)

  Market interest rate then the bond is discount bond

When the coupon rate of a coupon bond is less than the market interest rate then the bond is a discount bond.

  Market transaction involving a capital market security

An example of a secondary market transaction involving a capital market security is

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