Use what you need of the following set of information to answer the following four questions S 0 $1 0865 S 0 0 8223 $ S 0 $1 2316 E (S 1 (3 months) ) $1 1140 F 3 months $1 1140 Where euro British pound E ( ) Expected Do you think the market for the euro is in equilibrium as gleaned from the above information Why or why not Is the euro expected to appreciate or depreciate in the coming three month period against the dollar Explain your answer in your own words without using any calculations Now, calculate the expected rate of appreciation or depreciation in the value of the euro over the coming three month period Give your answer in percent with four decimal places If you have $242,000,000 how many euros would you be able to buy for 3 month delivery given the above exchange rates (Assume no bid ask spread) If one year ago the spot price of the dollar in terms of the British pound was 0 8860 $, do you think the British pound has appreciated or depreciated against the dollar over the last year (explain answer without any calculations) What was the percentage rate of change in the value of the pound over the last year Is your numerical answer consistent with your explanation

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Posted on Oct 02, 2024

Use what you need of the following set of information to answer the following four questions:

S₀ = $1.0865/ S₀ = 0.8223/$ S₀ = $1.2316/

E (S_{1 (3-months)}) = $1.1140/ F_3-months = $1.1140/

Where: = euro; = British pound; E ( ) = Expected.

Do you think the market for the euro is in equilibrium as gleaned from the above information? Why or why not?
Is the euro expected to appreciate or depreciate in the coming three-month period against the dollar? Explain your answer in your own words without using any calculations. Now, calculate the expected rate of appreciation or depreciation in the value of the euro over the coming three-month period. Give your answer in percent with four decimal places.

If you have $242,000,000 how many euros would you be able to buy for 3-month delivery given the above exchange rates? (Assume no bid/ask spread)
If one year ago the spot price of the dollar in terms of the British pound was 0.8860/$, do you think the British pound has appreciated or depreciated against the dollar over the last year (explain answer without any calculations)? What was the percentage rate of change in the value of the pound over the last year? Is your numerical answer consistent with your explanation?