In the following diagram the horizontal axis (S) is the FX spot price on the day of the option expiration, and the vertical axis represents the profit or loss from that option. It represents the payoff to the: Please answer the next question based on the following quotes on currency options contracts for Canadian dollars (CAD), where each contract has CAD 50,000. Exercise prices, call and put premiums are in cents. For the buyer of one CAD 7621 Sep Put contract, calculate the net profit or loss on the expiration date, when the spot price for CAD is $0.72 52440 Please use the data below, to answer the following question. Interest rate in US (Rh): 5% Interest rate in Canada (Rh): 7% The current spot rate for CAD(S0):$0.800 1-year forward rate for CAD(F):$0.781 What is your covered rate of return using CAD (Rcf)? Please use the data below, to answer the following question. Your covered interest arbitrage profit is: CAD 302.567 Please use the data below, to answer the following question. Interest rate in US (Rh): 5% Interest rate in Canada (Rh): 7% The current spot rate for CAD(S0)=$0.800 1-year forward rate for CAD (F): $0.781 The covered interest rate arbitrage trades that this will generate will cause: Please use the data below, to answer the following question. BigMac price in the US USD 3.50 BigMac price in Mexico MXN 80 Current Exchange Rate 1 USD =MXN20 Based on PPP, the MXN is ovecivalued by 12.5053 Please use the data below to answer the following question. Expected annual inflation rate in the US (Ih) 6% Expected annual inflation rate in UK (If) 12% Current Exchange Rate 1.GBP = USD 1.75 According to Purchasing Power Parity. 1-year later, the expected spot price for GBP should be: 518491 Please use the data below to answer the following question. Expected annual inflation rate in the US (Ih) 6% Expected annual inflation rate in UK (If) 12% Current Exchange Rate 1GBP= USD 1.75 If one year later, the spot rate of GBP turns out to be $1.675, then the GBP experienced in "real" purchasing power. Please use the data below to answer the following question. Expected annual inflation rate in the US (Ih) 6% Expected annual inflation rate in UK (If) 12% Current Exchange Rate 1GBP=USD1.75 If one year later, the spot rate of GBP turns out to be $1.675, then the net cash flow of a US exporter to UK will: Decroase Please use the data below, to answer the following question. What is the uncovered rate of return from the Euro Zone point of view (Ruf)? Which one of the following market conditions will produce a profit for a hedge-fund manager that is planning to borrow in UK and invest in the US. One could answer this question without a calculator Annual Percentage Change in Quote for the British Pound According to the Purchasing Power Parity, has an effect on the difference between the domestic and foreign interest rates; the percentage differcnce between the current spot exchange rate and future spot exchange rate
