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SHOW ME ALL WORKS PLS THANKS a) Assume that there are 2 neighbour exchange offices which apply the following exchange rates for Tunisian Dinar against
SHOW ME ALL WORKS PLS THANKS
a) Assume that there are 2 neighbour exchange offices which apply the following exchange rates for Tunisian Dinar against Turkish Lira: Office-1: TND/TRY: 2.65/2.68 Office-2: TND/TRY: 2.71/2.75 Initially you have 50.000 . Considering the arbitrage opportunity, how much money can you make at most with 100 transactions. (Any buying or selling for a currency is called a transaction.) (8 pts) b) After how many transactions, you will have more than 100.000 ? (3 pts) c) Great Britain pound against United States dollar in an online exchange office is GBP/USD: 1.3105/1.3241 Assume that you have 10.000 USD. You first buy pounds with all this amount and then convert it back to dollars. Then you again buy pounds and sell them to buy dollars again. If you repeat this process (buy and sell) for 150 times, how much dollar will be there in your account. Please show your answer with 2 decimal places. (9 pts) d) The indirect quote for Turkish Lira against Czech Koruna dollar is 2.99. Spot rate for 2 years in Turkish banks is 15% (sz=15%) and spot rate for 2 years in Czech banks is 10% (S2=10%). What is the forward exchange rate (TRY/CZK) 2 years from now? (6 pts) a) Assume that there are 2 neighbour exchange offices which apply the following exchange rates for Tunisian Dinar against Turkish Lira: Office-1: TND/TRY: 2.65/2.68 Office-2: TND/TRY: 2.71/2.75 Initially you have 50.000 . Considering the arbitrage opportunity, how much money can you make at most with 100 transactions. (Any buying or selling for a currency is called a transaction.) (8 pts) b) After how many transactions, you will have more than 100.000 ? (3 pts) c) Great Britain pound against United States dollar in an online exchange office is GBP/USD: 1.3105/1.3241 Assume that you have 10.000 USD. You first buy pounds with all this amount and then convert it back to dollars. Then you again buy pounds and sell them to buy dollars again. If you repeat this process (buy and sell) for 150 times, how much dollar will be there in your account. Please show your answer with 2 decimal places. (9 pts) d) The indirect quote for Turkish Lira against Czech Koruna dollar is 2.99. Spot rate for 2 years in Turkish banks is 15% (sz=15%) and spot rate for 2 years in Czech banks is 10% (S2=10%). What is the forward exchange rate (TRY/CZK) 2 years from now? (6 pts)Step by Step Solution
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