The contract expires today-spot short-term interest rate

Assignment Help Financial Management

Reference no: EM131996317

1. Spot RUB per one USD = 56.8139; one-year RUB interest rate = 7.75%; one-year USD interest rate = 1.75%. Answer with True or False:

a. The two-year forward exchange rate is RUB per one USD 63.119

b. The one-year RUB forward discount is 5.57%

c. The RUB is a premium currency because F > S

d. Both the spot and the forward rate are quoted European style

2. Three months ago, Bank C bought 170 contracts of April 2018 short-term interest rate futures at a price of 98.20. The contract expires today, and the spot short-term interest rate is 2.35%. Answer with True or False:

a. Total profit USD 233,750

b. Profit per contract USD 1,375

c. Total loss USD 233,750

d. Loss per contract USD 1,375

3. The March 2018 USD per one RUB contract trades at 0.01970 (contract size = RUB 2,500,000). The March 2018 USD per one EUR contract trades at 1.2030 (contract size = EUR 125,000). A trader who wishes to take a Long March RUB/Short March EUR position with a neutral view on the USD should use the following hedge ratio:

a. 3 RUB contracts per 1 EUR contract

b. 1 RUB contract per 3 EUR contracts

c. 1 RUB contract per 1 EUR contract

d. None of the above

4. Spot USD per one GBP = 1.4165; one-year GBP interest rate = 3.50%; one-year USD interest rate = 1.75%. Answer with True or False:

a. The one-year forward exchange rate is GBP per one USD 0.7181

b. The one-year forward exchange rate is USD per one GBP 1.4409

c. The one-year forward exchange rate is USD per one GBP 1.3925

d. The one-year forward exchange rate is GBP per one USD 0.6940

e. The British pound trades at a forward discount to the US dollar.

f. The British pound trades at a forward premium to the US dollar.

Reference no: EM131996317

Questions Cloud

The bonds make annual payments : Blue Jazz, Inc., has 8 percent coupon bonds on the market that have 23 years left to maturity. The bonds make annual payments.

The treasurer of mighty corporation : Once upon a time, the treasurer of “Mighty Corporation” (MCO) decided to issue a bond (hereafter: The bond) The bond would have a 20-year life and promised

Replication rate of particular salmonella : You know that 30,000 microbes are necessary to start infection and the replication rate of this particular salmonella is 20 minutes.

Inactive protein in a cell must be phosphorylated : Suppose that to become activated, an inactive protein in a cell must be phosphorylated. Explain how a chemical signal from outside the cell can trigger

The contract expires today-spot short-term interest rate : The contract expires today, and the spot short-term interest rate is 2.35%.

The organs of the digestive system : This unit we learned about the organs that comprise the digestive system. Which organs of the digestive system can be surgically removed safely?

How can fluid imbalance affect gas exchange in our body : How can fluid imbalance affect gas exchange in our body? What impact does it have on our body?

Respective reproductive systems : Trace the path of (a) a sperm cell and (b) an egg as they move through their respective reproductive systems.

Run-away process shaping human evolution : In relation to this article: A high density of X-linked genes for general cognitive ability: a run-away process shaping human evolution?

User Account

All Pages