Question
its urgent. can anyone help me please Part (a): Suppose 90-day investments in Britain have a 6% annualized return and a 1.5% quarterly (90-day) return.
its urgent. can anyone help me please
Part (a): Suppose 90-day investments in Britain have a 6% annualized return and a 1.5% quarterly (90-day) return. In Canada, 90-day investments of similar risk have a 4% annualized return and a 1% quarterly (90-day) return. In the 90-day forward market, 1 British pound equals $1.96. If interest rate parity holds, what is the spot exchange rate?
Part (b): You are the Vice President of International InfoExchange, headquartered in Toronto. All shareholders of the firm live in Canada. Earlier this month, you obtained a loan of 5 million US dollars from a bank in New York to finance construction of a new plant in St. Louis. At the time the loan was received, the exchange rate was $1.05 Canadian to the US dollar. By the end of the month, it has unexpectedly dropped to $.98. Has your company made a gain or loss as a result, and by how much?(5 Marks)
Part (c): Define each of the following terms:
a.Spot rate, exchange rate; discount on forward rate; premium on forward rate
b.Eurodollar; Eurobond; international bond; foreign bond
c.Define difference between European and American Options
Part (d): In the spot market 12.8 pesos can be exchanged for one Canadian dollar. A DVD costs $15 in Canada. If purchasing power parity holds, what should be the price of the same DVD in Mexico?
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