A currency speculator expects the price of BP to change from $1,40/BP to $1.70/B
ID: 2727278 • Letter: A
Question
A currency speculator expects the price of BP to change from $1,40/BP to $1.70/BP in 90 days. You have a line of credit for $14 million or BP 10 Million now. Interest rate in USA is 3% It is 4% in England. Determine the amount of profit the speculator will make in dollars a) $17,170,000 b)$2,870,000 c)$3,065,000 41) You have access to $200,000, One year interest rate in USA: 4% One year rate in Mexico: 9% Spot rate for Peso: $1.50/Peso; One year forward rate: $1,41/Peso. Use this data to answer the following three questions: what is the covered rate of return from USA point of view? a) 3.88% b)1.73% c)2.46% d)5% 42) what is the covered rate of return from the Mexican point of view? a)10.63% b)8.28% c)5.91% d)13.22% 43) How much is your covered arbitrage profit (in US dollars)? a)$4487 b)$2156 c)$3276 d)$1788 44) Please use this data to answer the following three questions: Assume that USA interest rate is 6%; Mexico the interest rate is 2% Spot rate now is $0.50/Peso.Spot rate one year later is:$0.51/Peso; Find the uncovered return from the USA point of view a)5.12% b)3.71% c)8.16% d)4.04% 45) Find the Uncovered return from Mexico's point of view a)5.11% b)3.92% c)1.96% d)6.88% 47) Assume that the following quotes are given at different locations by traders: New York: USD/Peso: 0.075; Chicago: USD/Frane: 1.05; Geneva: Franc/Peso: 0.069. USD is US dollar; All are direct quotes in NY and chicago, If you have access to $3 Million now, how much profit will you make doing the triangular arbitrage with this set of information. a)$124,780 b)$98,455 c)$246,877 d)$105,590Explanation / Answer
40)
D - $ 4,675,000
41)
C 2.46%
42)
5.91%
43)
$ 3276
44)
D 4.04%
45)
B 3.92%
46)
C 3840 PESO
47)
A $ 124,780