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Kapinsky Capital Geneva (A). Christoph Hoffeman trades currency for Kapinsky Capital of Geneva. Christoph has $10 million to begin with, and he must state all
Kapinsky Capital Geneva (A). Christoph Hoffeman trades currency for Kapinsky Capital of Geneva. Christoph has $10 million to begin with, and he must state all profils at the end of any speculation in U.S. dollars. The spot rate on the euro is $1.3359/t, while the 30-day forward rate is $1.3349/. a. If Christoph believes the euro will continue to rise in value against the U.S. dollar, so that he expects the spot rate to be $1.3600/ at the end of 30 days, what should he do? b. If Christoph believes the euro wil depreciate in value against the U.S. dollar, so that he expects the spot rate to be $1.2800 / at the end of 30 days, what should he do? a. If Christoph believes the euro will continue to rise in value against the U.S. dollar, so that he expects the spot rate to be $1.3600/ at the end of 30 days, what should he do? (Select the best choice below.) O A In this case, Christoph believes the dollar will be trading at $1.3600/ in the open market at the end of 30 days, but he has the ability to buy or sell dollars at a forward rate of $1.3349/ . He should therefore buy euros forward 30 days (requires no actual cash flow up front), and at the end of 30 days take delivery of those euros and sell in the spot market at the higher dollar rate for profit. OB. In this case, Christoph believes the dollar will be trading at $1.3349/ in the open market at the end of 30 days, but he has the ability to buy or sell dollars at a forward rate of $1.3600/. He should therefore buy euros forward 30 days (requires no actual cash flow up front), and at the end of 30 days take delivery of those euros and sell in the spot market at the higher dollar rate for profil Oc. In this case, Christoph believes the dollar will be trading at $1.3600/ in the open market at the end of 30 days, but he has the ability to buy or sell dollars at a forward rate of $1.2800 / . He should therefore buy euros forward 30 days (requires no actual cash flow up front), and at the end of 30 days take delivery of those euros and sell in the spot market at the higher dollar rate for profit OD. In this case, Christoph believes the dollar will be trading at 51.2800 / C in the open market at the end of 30 days, but he has the ability to buy or sell dollars at a forward rate of $1.3349/C. He should therefore buy euros forward 30 days (requires no actual cash flow up front), and at the end of 30 days take delivery of those euros and sell in the spot market at the higher dollar rate for profit b. If Christoph believes the euro wil depreciate in value against the U.S. dollar, so that he expects the spot rate to be $1.2800/C at the end of 30 days, what should he do? (Select the best choice below.) O A. Since Christoph believes that the dollar will strengthen to $1.3600/E in 30 days, he should sell euros forward now at the higher dollar rate, wait 30 days and buy the euros needed on the open market at $1.2800/, and immediately then use those euros to fulfill his forward contract to sell euros for dollars at $1.3349/C for a profit. OB. Since Christoph believes that the dollar will strengthen to $1,2800/C in 30 days, he should sell euros forward now at the higher dollar rate, wait 30 days and buy the euros needed on the open market at $1.2800/, and immediately then use those euros to fulfill his forward contract to sell euros for dollars at $1.3600/ for a profit. OC. Since Christoph believes that the dollar will strengthen to $1.3349/C in 30 days, he should sell euros forward now at the higher dollar rate, wait 30 days and buy the euros needed on the open market at $1.2800/, and immediately then use those euros to fulfill his forward contract to sell euros for dollars at $1.3600/ for a profit. OD. Since Christoph believes that the dollar will strengthen to $1.2800/ in 30 days, he should sell euros forward now at the higher dollar rate, wait 30 days and buy the euros needed on the open market at $1.2800/, and immediately then use those euros to fulfill his forward contract to sell euros for dollars at $1.3349/ for a profit
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