Question
1. The Venezuelan government officially floated the Venezuelan bolivar (Bs) in February 2002. Within weeks, its value had moved from the pre-float fix of Bs778/$
1.
The Venezuelan government officially floated the Venezuelan bolivar (Bs) in February 2002. Within weeks, its value had moved from the pre-float fix of Bs778/$ to Bs1,025/$.
By what percentage did the value change? (round to two decimal places).
2.
Calculate the forward premium on the dollar (the dollar is the home currency) if the spot rate is 1.3300/$ and the 3-month forward rate is 1.3400/$. Note: Use a 360-day year.
The forward premium on the dollar is _____________%. (Round to four decimal places).
3.
Calculate the cross rate between the Mexican peso (Ps) and the euro () from the following spot rates: Ps12.45/$ and 0.7550/$.
The cross rate in pesos per euro is ____________ Ps/. (Round to four decimal places).
4.
Assuming the following quotes, calculate the interbank (triangular) arbitrage profit that is possible for a market trader at Citibank with $1,000,000.
Citibank quotes U.S. dollar per pound | $1.5900=1.00 |
National Westminster quotes euros per pound | 1.2000=1.00 |
Deutschebank quotes U.S. dollar per euro | $0.7550=1.00 |
The interbank arbitrage profit is $___________. (Round to the nearest cent).
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