Reference no: EM131924138
Assume that on December 6, 2017, the spot rate for Canadian Dollars was 1.3353 CAD/1 USD. The 180-day (6 month) forward rate quoted in the market was for 1.3436 CAD/1 USD and the risk-free rate on 180-day securities was 0.66 percent APR for United States LIBOR and 1.91 percent APR for Canadian LIBOR. (LIBOR rates are widely used as a reference rate for financial instruments.) Assume that the US is the home country.
Are the quotes for CAD above relative to the USD direct or indirect quotations?
Circle one: direct or indirect
Is the USD expected to appreciate or depreciate relative to the CAD given the forward rate quoted above?
Circle one: appreciate or depreciate
What is the implied forward rate if interest rate parity holds in this case? Does interest rate parity hold here? Use 4 decimal places for accuracy.
Implied forward rate _________
Which country’s risk free security offers the highest expected $ profit for a US investor, or are the $ profits the same? Determine the $ profit for both investments using a beginning amount of 1,000,000 USD.
US LIBOR $ profit ________
Canadian LIBOR $ profit ________
Discuss about the make-whole call price
: In 2010, Southern California Ellison issued 30 year bonds with 90 bp spread over the then 30-year Treasury yield and make-whole call provision.
|
Firm cost of equity based on capm approach
: If firm's beta is 2.0, risk-free rate is 3%, and the expected return on the market is 12%, then what would be the firm's cost of equity based on CAPM approach?
|
Will the holders of the given make-whole bonds be harmed
: Suppose the bond is called on April 1, 2018. Under what conditions, will the holders of these make-whole bonds be harmed, in the sense of getting less than.
|
What would be the expected price of a toyota camry
: A 2013 Toyota Camry can be bought in Buffalo, NY, for $18,620. The same model Camry can be purchased across the Canadian border in Hamilton, ON.
|
What is implied forward rate if interest rate parity holds
: What is the implied forward rate if interest rate parity holds in this case? Does interest rate parity hold here? Use 4 decimal places for accuracy.
|
Calculate the firm cash flow to creditors
: The 2014 balance sheet of Maria's Tennis Shop, Inc., showed long-term debt of $4.2 million, and the 2015 balance sheet showed long-term debt of $7.1 million.
|
How much is time value premium-exercise value
: How much of the $1.25 option price is exercise value and how much is time value premium?
|
What percentage decline in earnings
: What percentage decline in earnings before interest and taxes could Natural Selection have sustained before failing to cover.
|
What kind of deal did the running back scamper off with
: If the appropriate interest rate is 9 percent, what kind of deal did the running back scamper off with? Assume all payments other than the first $11 million.
|