Assume that annual interest rates are 6 percent in the United States and 5 percent in Turkey. An FI can borrow (by issuing CDs) or lend (by purchasing CDs) at these rates. The spot rate is $0.6624/Turkish lira (TL).
a.
If the forward rate is $0.6735/TL, how could the bank arbitrage using a sum of $5 million? What is the spread earned? (Do not round intermediate calculations. Round your answer to 4 decimal places. (e. g., 32.1616))
Spread earned %
b.
At what forward rate is this arbitrage eliminated? (Do not round intermediate calculations. Round your answer to 5 decimal places. (e. g., 32.16161))
Forward rate
Answers: 2
Other questions on the subject: Business
Business, 22.06.2019 11:00, neash19
Why does an organization prepare a balance sheet? a. to reveal what the organization owns and owes at a point in time b. to reveal how well the company utilizes its cash c. to calculate retained earnings for a given accounting period d. to calculate gross profit for a given accounting period
Answers: 3
Business, 22.06.2019 19:30, hmae2304
Alaska king crab fishing in the 1960s and '70s was a dangerous but rich fishery. boats from as far away as california and japan braved the treacherous gulf of alaska crossing to reach the abundant king crab beds in cook inlet and bristol bay. suddenly, in the early 1980s, the fishery crashed due to over fishing. all crabbing in those areas ended. to this day, there is no crabbing in bristol bay or cook inlet. a. how would an economist explain the decline of the alaska king crab fishery
Answers: 3
Business, 22.06.2019 19:50, Salas1333
Which of the following would create the most money? the initial deposit is $6,500 and the required reserve ratio is 20 percent. the initial deposit is $3,000 and the required reserve ratio is 10 percent. the initial deposit is $7,500 and the required reserve ratio is 25 percent. the initial deposit is $4,500 and the required reserve ratio is 15 percent.
Answers: 1
Business, 22.06.2019 20:30, jessicaisbaehood
Juanita and sam attend a beach party and notice that the local beach appears to have a great deal more trash washed up on shore than it did when they were young. the water doesn't appear nearly as clear, and there seems to be less evidence of small water creatures living in the shallows. an afternoon at the local library convinces them that one major cause is the new factory nearby. after some discussion, they decide their next step should be identifying the cause of the changes identifying the problem picketing the guilty factory lobbying their elected representatives to complain about the problem talking to a local environmental group about solutions
Answers: 3
You know the right answer?
Assume that annual interest rates are 6 percent in the United States and 5 percent in Turkey. An FI...
Questions in other subjects:
Mathematics, 17.03.2020 21:15
Mathematics, 17.03.2020 21:15
Mathematics, 17.03.2020 21:15
English, 17.03.2020 21:15
