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1. Company A pays Bank B 100mm USD today and A pays B 100mm*P HKD in 1 year. 2. B pays A HKD776mm today and
1. Company A pays Bank B 100mm USD today and A pays B 100mm*P HKD in 1 year. 2. B pays A HKD776mm today and B pays A USD 100mm in one year. Assuming 1 USD = 7.76 HKD today. 1 year USD interest rate is 2%. 1 year HKD interest is 0.1%. What will Company A receives in 1 year time (i.e. How much is P)? If Company A take the 100mm USD received today and put it into bank as 1 year deposit with interest rate of 5%, how much it willreceive (assuming interest payment is compounded monthly) after 1 year? What is the MTM of the forward contract at month 3 if the HKDUSD exchange rate remains at 7.76 but interest HKD rate rises to8%, while USD interest rate remains the same at 2%? Is Arbitrage that takes advantage of HKDUSD exchange rate peg a good idea? 1. Company A pays Bank B 100mm USD today and A pays B 100mm*P HKD in 1 year. 2. B pays A HKD776mm today and B pays A USD 100mm in one year. Assuming 1 USD = 7.76 HKD today. 1 year USD interest rate is 2%. 1 year HKD interest is 0.1%. What will Company A receives in 1 year time (i.e. How much is P)? If Company A take the 100mm USD received today and put it into bank as 1 year deposit with interest rate of 5%, how much it willreceive (assuming interest payment is compounded monthly) after 1 year? What is the MTM of the forward contract at month 3 if the HKDUSD exchange rate remains at 7.76 but interest HKD rate rises to8%, while USD interest rate remains the same at 2%? Is Arbitrage that takes advantage of HKDUSD exchange rate peg a good idea
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