Japan yen .00897 111.49 1-mos forward .00899 111.22 3-mos forward .00903 110.70 6-mos forward .00910 109.90 Malaysia ringgit .2452 4.0790 QUESTION 1 1. Using the American term quotes from Exhibit 5.7, calculate a cross-rate matrix for the euro, Swiss franc, Japanese yen, and the British pound so that the resulting triangular matrix is similar to the portion above the diagonal in Exhibit 5.8. 2. Using the same information in question 1, optain the updated quotes (as of the day you are performing the analysis) and calculate a cross rate for the euro, Swiss franc, Japanese yen, and the British pound. Attach File Browse Local Files Browse Content Collection QUESTION 2 A foreign exchange trader with a U.S. bank took a short position of 5,000,000 when the $/ exchange rate was 1.55. Subsequently, the exchange rate has changed to 1.61. Required: 1. Is this movement in the exchange rate good from the point of view of the position taken by the trader? 2. By how much has the bank's liability changed because of the change in the exchange rate? Attach File Browse Local Files Browse Content Collection QUESTION 3 MINI CASE: SHREWSBURY HERBAL PRODUCTS, LTD. Welsh border, is an old-line producer of herbal teas, seasonings, and medicines. Its Question Completion Status: Allach Fle Browse Local Files Browse Content Collection QUESTION 3 MINI CASE: SHREWSBURY HERBAL PRODUCTS, LTD. Shrewsbury Herbal Products, located in central England close to the Welsh border, is an old-line producer of herbal teas, seasonings, and medicines. Its products are marketed all over the United Kingdom and in many parts of continental Europe as well. Shrewsbury Herbal generally invoices in British pound sterling when it sells to foreign customers in order to guard against adverse exchange rate changes. Nevertheless, it has just received an order from a large wholesaler in central France for 320,000 of its products, conditional upon delivery being made in three months' time and the order invoiced in euros. Shrewsbury's controller, Elton Peters, is concerned with whether the pound will appreciate versus the euro over the next three months, thus eliminating all or most of the profit when the euro receivable is paid. He thinks this is an unlikely possibility, but he decides to contact the firm's banker for suggestions about hedging the exchange rate exposure. Mr. Peters learns from the banker that the current spot exchange rate is /E is 1.4537, thus the invoice amount should be 465,184. Mr. Peters also learns that the three-month forward rates for the pound and the euro versus the U.S. dollar are $1.8990/1.00 and $1.3154/1.00, respectively. The banker offers to set up a forward hedge for selling the euro receivable for pound sterling based on the /E forward cross-exchange rate implicit in the forward rates against the dollar. Other assumption: Suppose Shrewsbury sells at a twenty percent markup Required: What would you do if you were Mr. Peters? What would be the scenario if the pound appreciate 10% versus the euro over the next three months? What would be th escenario if the euro appreciate 6% versus the pound over the next three months? Attach File Browse Local Files Browse Content Collection Click Save and Submit to save and submit, Click Save All Answers to save all answers. 50 points Save All Answers Save and S .1079 9.2695 Switzerland franc 1.0018 .9982 1-mos forward 1.0047 .9953 3-mos forward 1.0104 .9897 6-mos forward 1.0193 .9811 Turkey Iira .1778 5.6248 UK pound 1.3158 .7600 1-mos forward 1.3180 .7588 3-mos forward 1.3218 .7565 6-mos forward 1.3277 .7532 . 6.6457 Euro area euro 1.1233 .8903 1-mos forward 1.1262 .8880 3-mos forward 1.1319 .8835 6-mos forward 1.1407 .8767 Hungary forint .00351 284.71