Module 6 discussion Problem set 1 Suppose the exchange rate between U.S. dollars and Swiss francs is SF 1.41 = $1.00 and the exchange rate between the U.S. dollar and the euro is $1.00 = 1.64 euros. What is the crossrate of Swiss francs to euros? What is the cross-rate of euros to Swiss francs? Suppose that 1 British pound currently equals 1.62 U.S. dollars and 1 U.S. dollar equals 1.62 Swiss francs. What is the cross rate of Swiss francs to British pound? A trader observes that in the spot exchange market $1 can be exchanged for 9 Mexican pesos or for 111.23 Japanese yen. What is the cross-rate between the yen and the peso that is how many yen would you receive for every peso exchanged? Problem set 2 If the spot rate of the Israeli shekel is 5.51 shekels per dollar and the 180-day forward rate is 5.97 shekels per dollar then the forward rate for the Israeli shekel is selling at a ____ to the spot rate. (should the answer be premium or discount?) Problem set 3 In 1985 a given Japanese imported automobile sold for 1 476 000 yen or $8 200. If the car still sold for the same amount of yen today but the current exchange rate is 144 yen per dollar what would the car be selling for today in U.S. dollars Problem set 4 Given the following exchange rates which of the following currencies are selling at a premium? In U.S. $ Per U.S. $ Canada (Dollar) 0.8077 1.2381 6-mos forward 0.8096 1.2352 Japan (yen) 0.009963 100.37 6-mos forward 0.009999 100.01 Switzerland (franc) 0.8752 1.1426 6-mos forward 0.8788 1.1379 UK (pound) 1.4729 0.6789 6-mos forward 1.4741 0.6784 Problem set 5 Suppose the spot exchange rate for the Canadian dollar is C$1.23 and the six-month forward rate is C$1.27. What is worth more a U.S. dollar or a Canadian dollar? Is the U.S. dollar selling at a premium or a discount relative to the Canadian dollar? Problem set 6 Suppose the Japanese yen exchange rate is ¥106 = $1 and the British Pound exchange rate is £1 = $1.51. What is the cross-rate in terms of yen per pound? Suppose a dealer quotes a rate of ¥165 = £1. Is there an arbitrage opportunity here? If there is explain how to take advantage of the mispricing? Problem set 7 Suppose the Swiss Franc exchange rate is SF 2.00 = $1.00 and the British Pound exchange rate is £0.60 = $1.00. Suppose a dealer quotes a rate of SF 4.00 = £1. Is there an arbitrage opportunity here? If there is explain how to take advantage of the mispricing?
nsu fin5130 module 6 discussion latest 2017 october
by | Sep 6, 2025 | Statistics
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