The future value and present value equations

Assignment Help Financial Management

Reference no: EM131873174

1. The future value and present value equations also help in finding the interest rate and the number of years that correspond to present and future value calculations.

2. Suppose today’s exchange rate is $USD 0.90/CAD. The annualized six-month interest rates on US dollars and Canadian dollars are 2% and 5% respectively. The six-month forward rate is $USD 0.89/CAD. A foreign exchange advisory service has predicted that the CAD will appreciate to $USD 0.93/CAD within six months.

Does uncovered interest rate parity hold? What is the arbitrage profit per $100,000 USD?

A) No; arbitrage profit= $4917

B) No; arbitrage profit= $6500

C) No; arbitrage profit= $1833

D) Yes; arbitrage profit= $6500

Reference no: EM131873174

Questions Cloud

What is the present value of the annual dividend : What is the present value of the annual dividend that is expected to be paid in 8 years from today?

Three annual dividends paid by oxygen optimization stock : The next three annual dividends paid by Oxygen Optimization stock are expected to be 2.67 dollars in one year, 2.25 dollars in two years,

Determine the interest payment on the borrowing : Which will be used to determine the interest payment on the borrowing and the net settlement on the swap contract on 12/31/2016.

Forecast wal-mart stores growth for the future : Financial analysts forecast Wal-Mart Stores (WMT) growth for the future to be 13.00 percent.

The future value and present value equations : The future value and present value equations also help in finding the interest rate. Does uncovered interest rate parity hold?

The expected return for litchfield design stock : If 1) the expected return for Litchfield Design stock is 16.7 percent; 2) the dividend is expected to be 2.19 dollars in 2 year(s),

Deflation contraction expansion stagflation : A decrease in the gross domestic product (GDP) would indicate that the economy is experiencing a(n) deflation contraction expansion stagflation.

What is present value of the dividend : What is the present value (as of today) of the dividend that is expected to be paid in 6 years from today?

Annual growth rate of the stock dividend expected : What is the annual growth rate of the stock’s dividend expected to be?

User Account

All Pages