AT&T; LTE 2:47 PM 1033% Back Bonus Homework for Cha... Bonus homewerk: Chapter 1

Question

AT&T; LTE 2:47 PM 1033% Back Bonus Homework for Cha... Bonus homewerk: Chapter 16 (2 eredits) Due date: August.10 TRUL ALSE Wite T if he statement s true and if the statement is false The forward exchange rane quoted boday shouild be equali to the spot rate in the future The Eurodellar market is larger han any financial mrket in the United States An indirect quote indicales the number of units of foreign ourrency that can be tought for one uni of the home curmency 4? Aquoteof 7645 eurosper dollar in New York is ar, esangle of a direct pott MULTIPLE CHOICE Choose the one altennative that best completes the stanement or answvers the question A British-made component costs 36 U K pounds A company in the United Staes needs to buy hine components and the current indirect quote indicats that one dollar will buy 8250 pounch gnoring transactions costs how much will one component cost in U.S dollan A) 522 50 ) 57 60 G) 545 9 D)$72 00 6)Asume that the Brtish pound is worth 14242 US dollars Hanew laguar costs $138 000 what s the cost in Britihh poun 8) 71 442 C)84985 ) 201,000 T) Suppose the. 3S0-day forward echarge rate is 1 d67 dellars per British pound and the arrer.pot If the 360-day interest ? Brithh pound ao-day interest rate inGreat Britain is 3%, is the market nequltr rate parity theory acording to the interest A)Na because the higher interest rate ito u ited States(2%) i s that the forward 80No. because the trwardpremu-onthe poundis2%wtietheinterest rate in the United C)veL ausethhe forward prermum on the pond Q%) nexactiyofhet by the lower iterest D) Cannot be determined without knowing the amount of money being esthanged exchange rate should be 2%lower Par, the current spot rate Rates is 67% higer than the interest rate in Great Brnan rate in Great Britain ESSAY Write your answer in the space provided or on a separate sheet of paper B) The spot exchange tate in New York h 1.600 dollars per British pound. The 360-diry forward exchange rateis 1 680 dílars per pourd The one-year inerest rate in Great Britain is 2% wyle the one-year unrest rate in the whutl should t the interest ate be United Stabe according to the inbures rabe parity theory? 1 of 1 Dashboard Calendar To Do Notifications Inbox

Explanation / Answer

1 TRUE 2 TRUE 3 TRUE 4 TRUE 5 B (36/0.625) 6 C (138000/1.6242) 7 C Forward Rate = Spot Rate(1.625*1.05/1.03) 8 Spot Rate 1 pound = $1.6 Forward Rate $1.68/Pound Britain Interest Rate 2% IRPT Equation is 1(1.02)Pound=$1.6(US Int Rate) $1.6(US Int Rate)/1.02 = 1.68 US interest Rate 7.1%

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