User Account

All Pages

What would be arbitrage profit in yen

Assignment Help Finance Basics
Reference no: EM133120356

Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $5,000,000 or its yen equivalent, in a covered interest arbitrage between U.S. dollars and Japanese yen. He faced the following exchange rate and interest rate quotes.

Arbitrage funds available $5,000,000 or its Yen equivalent

Spot rate ¥/$ 118.60

360 day Forward rate ¥/$ 117.80

U.S. dollar annual interest rate 2.4%

Japanese yen annual interest rate 1.7%

How can he make a CIA profit?

a) By borrowing yen and investing in dollars

b) By borrowing dollars and investing in yen

c) CIA profit is not possible in this case.

What would be his arbitrage profit in Yen? (round to two decimal places).

Reference no: EM133120356

Questions Cloud

Data Analytic Terminology : As a health care manager it is important that you understand data analytic terms as they are used in clinical and public health settings
Calculate the monthly payment for loan individually : Suppose you have the following three student loans: $12,000 with an APR of 7.5% for 12 years, $16,000 with an APR of 8% for 17 years, and $13,500 with an APR of
Company trading on london stock exchange : A UK Company trading on London Stock Exchange has the following information as of the end of 2021.
Prices of call options of the company : 1. For demonstration purposes you decided to use the binomial option pricing to find the price of a call option of the company's stock. The current price of the
What would be arbitrage profit in yen : Takeshi Kamada, a foreign exchange trader at Credit Suisse (Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $5,000,000 or its
Discuss the problems with the benchmark indexes : Briefly discuss the problems with the benchmark indexes (risks) of the international fixed income asset class and the currency hedging issues that can arise.
Calculate the duration at interest rate : A 10-year 15% coupon bond with a face value of $2000 has cash payments identical to zero coupon bonds of $200 each year.
Co-habitation agreement for type of relationship : Chris and Angelina are considering living together as a common-law couple with children from previous relationships.
What is the internal rate of return : What is the internal rate of return (IRR) for the project? Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units"

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the present value of all the cash flows

(a) Draw a timeline. (b) What is the present value of all the cash flows associated with NWC? (c) How much would you pay to eliminate the need for this NWC

  Raising capital through the issuance of bonds

Relating to a publicly traded company, what may be some points you would mention to support the position that it may be advantageous for a business to raise cap

  Preparing for their initial public equity offering

Locked-In Real Estate (LIRE) is preparing for their Initial Public Equity Offering (IPO). With its holdings consisting of rent controlled apartments, and no plans for expanding, LIRE plans to payout all of its earnings as dividends.

  Assessment of company-team leadership and roles

Create a list of potential areas of weakness based on the information you have in the case brief. Explain the interventions that may need to take place in the senior management team, finance, marketing, and training departments

  Describe the ways in which healthcare financial managers

Describe the ways in which healthcare financial managers use financial resources and cost classifications to allocate indirect costs to direct

  Define lessee lessor operating lease financial lease

Define each of the following terms: a. Lessee; lessor b. Operating lease; financial lease; sale and leaseback; combination lease; synthetic lease; SPE c. "Off-balance sheet" financing; capitalizing

  Form cost of preferred stock financing-nature food inc

Nature Food Inc. needs to estimate the cost of financing on preferred stock. The firm has preferred stock outstanding that pays a constant

  Factors impacts intellectual development

Think about children's education in the U.S. Describe two factors that are currently hindering the intellectual development of children in this country.

  How is it related to a bank''s return on assets

What is the difference between a bank's return on assets (ROA) and its return on equity (ROE)? How are they related?

  What is the market value of stock-john inc

John inc. is expecting a period of intense growth and has decided to retain more of their earnings to help finance that growth.

  Discuss the importance of minimum variance portfolios

Explain how Security Market Line is different from Capital Market Line. Identify and discuss the importance of minimum variance portfolios

  What is the expected price of the stock

VVH Company's stock has a beta of 3. The last dividend was $4 per share. The dividend is expected to grow at 5%. What is the expected price of the stock?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd