What is the six-month forward exchange rate

Assignment Help Financial Management
Reference no: EM131343280

Interest Rate Parity

The nominal yield on 6-month T-bills is 8%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 3.5%. In the spot exchange market, 1 yen equals $0.005. If interest rate parity holds, what is the 6-month forward exchange rate? Round the answer to five decimal places.

$

Reference no: EM131343280

Questions Cloud

Implement an interpolation search : Above the current value of lower. Implement an interpolation search and compare its performance with the log2 n performance of the binary search. Use a uniform random number generator to produce the array a. Note that this array will need to be sor..
Writes that the peculiar characteristic of prejudice : This probably earns an immediate "of course" from roughly everyone today, which makes it puzzling how someone like Edmund Burke could have written: "Prejudice . . . is of ready application in the emergency; it previously engages the mind in a stea..
What are your thoughts on privatization agree or disagree : What are your thoughts on privatization? Agree? Disagree? Depends? Why, or why not? Please use specific examples to support your opinion.
Policy analysts should research the issues : PAD 520- Policy analysts should research the issues and determine the fundamental causes of social problems such as crime, poverty, or homelessness and then recommend solutions.
What is the six-month forward exchange rate : The nominal yield on 6-month T-bills is 8%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 3.5%. In the spot exchange market, 1 yen equals $0.005. If interest rate parity holds, what is the 6-month forward exchange r..
How you calculate each cost schedule : BUS102 Introduction to Microeconomics - If Australia increases its production of ethanol from 40 barrels per day to 54 barrels per day, what is the opportunity cost of an additional barrel of ethanol?
Discuss the history of jails in america : Discuss the history of jails in America. What are the three phases of architectural design? Your response should be at least 250 words in length
What is present value of the cash flows : The appropriate discount rate for the following cash flows is 9 percent compounded quarterly. Year Cash Flow 1 $ 780 2 860 3 0 4 1,450 What is the present value of the cash flows?
Interest payments are paid annually : Suppose you bought a 20-year, $1,000 face-value bond for par 5 years ago. The annual coupon rate on this bond is 8.5% and interest payments are paid annually. The annual coupon rate on this bond is 8.5% and interest payments are paid annually. If ret..

Reviews

Write a Review

Financial Management Questions & Answers

  Entrepreneurs expect pre-tax earnings to increase

Benson, Athavale & Kemper (BAK) started a manufacturing facility in the last century. This firm, profitable since inception produces steering units for the automotive industry. The 3 founders have been averse to debt.

  Free of material misstatements

What assurance, if any, if there that the financial statements are in compliance with GAAP, and are free of material misstatements?

  Portfolio containing stock-what is beta of your portfolio

You have $130,000 to invest in a portfolio containing Stock X and Stock Y. Your goal is to create a portfolio that has an expected return of 14.6 percent. Stock X has an expected return of 12.8 percent and a beta of 1.30, and Stock Y has an expected ..

  What is the required rate of return on firms equity

Johnson Inc has 2,000 bonds and 300,000 shares of common stock outstanding. The common stock has a beta of 1.3 and trades at $18 per share . The firm is in 40% tax bracket. The market risk premium is 6% and yield on 10 year U.S. treasuries is 4%. The..

  Total cost for the job on its job cost sheet would be

The following data have been recorded for recently completed Job 323 on its job cost sheet. Direct materials cost was $2,260. A total of 37 direct labor-hours and 141 machine-hours were worked on the job. The direct labor wage rate is $13 per labor-h..

  Perform a comparative financial analysis of delta airlines

Armbrust's bank has been pressuring the firm to improve its liquidity. Which of the following actions proposed by the CFO do you believe will actually achieve this objective? Why or why not?

  Cost of preferred equity when floatation costs are accounted

The market price of the firm’s preferred stock is $116.00. The preferred pays a 12.1% annual dividend on its $100 par value. Floatation costs are $4 per share. What is the cost of preferred equity when floatation costs are accounted for?

  What is discounted payback period

A project has an initial cost of $8,800 and produces cash inflows of $2,700, $5,000, and $1,600 over the next three years, respectively. What is the discounted payback period if the required rate of return is 7 percent?

  Find the real rate of return on the investment

Find the real rate of return on the investment using the exact method: A bank account that yields a nominal annual rate of 1.6%, if a market basket of consumer items rises in price from $800 to $825.

  Considering investing in a project with a beta coefficient

Mr. Johnson is considering investing in a project with a beta coefficient of 1.35. What would you recommend if this investment has an 11.5 percent rate of return, risk-free rate is 2.5 percent, and the rate of return on the market portfolio of assets..

  What is your return rate in one year

Last year, you purchased a $1,000 par value bond with a 7.5% annual coupon and a 20-year maturity. At the time of the purchase, it had an expected YTM of 8%. After receiving the coupon, you sold the bond today for $930. What is your return rate in on..

  Debt-to-assets ratio assuming the firm uses only debt

Ratio Calculations Assume the following relationships for the Brauer Corp.: Sales/total assets 1.4x Return on assets (ROA) 4% Return on equity (ROE) 13% Calculate Brauer's profit margin assuming the firm uses only debt and common equity. Round your a..

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