Annualized percentage forward premium for the dollar

Assignment Help Business Economics
Reference no: EM131090477

A forward premium for a given currency (say the nominal bilateral exchange rate value of the dollar where S = 80 yen/1 dollar = 80) occurs when the value of the currency as given by the forward spot rate appreciates such as S = 85 yen/1 dollar = 85. If a currency such as the dollar has a lower forward spot rate where S = 75, it depreciates and is at a forward discount. If Fn = 85 is the forward spot rate for yen/1 dollar n months from now and S = 80 is the current spot rate of yen/1 dollar, then the dollar is at a forward premium while the yen is at a forward discount. The percentage change is the same formula but it can be converted to an annualized percentage change by using the formula (Fn - S)/S x (12/n) x 100. If Fn = 81 yen/dollar = 81, S = 79, and n = 3 months, what is the annualized percentage forward premium for the dollar? The annualized percentage forward discount for the yen?

Reference no: EM131090477

Questions Cloud

Remarkable portfolios in field : Students are invited to prepare a material based on the following: You are professional event managers with remarkable portfolios in this field. You are preparing a risk management plan for a prestigious event which you are organizing (feel free t..
Assume the market for sugar : Assume the market for sugar. When a drought reduces the sugar crop and at the same sugar substitutes become more popular, then: A. price must increase, but the change in quantity is indeterminate. b. price must decrease, but the change in quantity is..
Lower and less volatile annual rates of inflation : Both theory and experience suggest that (fill in the blank) results in lower and less volatile annual rates of inflation. a. having no central bank b. having a central bank that is not independent c. having a central bank that is highly independent d..
What is the minimum time for 90 per cent recombination : What is the minimum time for 90 per cent recombination?
Annualized percentage forward premium for the dollar : A forward premium for a given currency (say the nominal bilateral exchange rate value of the dollar where S = 80 yen/1 dollar = 80) occurs when the value of the currency as given by the forward spot rate appreciates such as S = 85 yen/1 dollar = 85. ..
Advertising from small companies : How do Google‘s online and revenue sources and strategy differ from yahoo's? Which online and strategy is superior for attracting advertising from small companies? For attracting advertising from large companies? Defend your position.
Show how each of these products may be generated : show how each of these products may be generated.
Assumptions of completeness-transitivity-pig theory demand : With respect to three goods- ice cream, green tea, and digital cameras, what does it mean when your preference for, and satisfaction gained from, these three goods are consistent with the assumptions of completeness, transitivity, and (What I call) t..
A transaction always affects at least two elements : a. A vacant lot acquired for $180,000 is sold for $440,000 in cash. What is the effect of the sale on the total amount of the seller's (1) assets, (2) liabilities, and (3) stockholders' equity?

Reviews

Write a Review

Business Economics Questions & Answers

  Large number of independent loan prospects

Large number of independent loan prospects are available, each paying return of $16 on $100 with probability of 1/2 and 1/2 of $4 return. Each saver in economy derives happiness from income according to: H= I^(1/2) Competition between banks so each h..

  Explain two extreme demand and supply conditions

Recently, the Obama administration proposed a $1.00 per unit (pack) excise tax on cigarettes (which would be imposed legally or statutorily on cigarettes sellers). Using (separate) competitive supply and demand diagrams of the cigarettes market caref..

  Second draft for grammatical errors

Write a first draft. Describe the topic and your response to someone else, and inquire about whether it makes sense and flows well. Edit your first draft, taking into account your reviewer's comments. Edit your second draft for grammatical errors,..

  Show graphically how the effects of an increase in supply

Show graphically how the effects of an increase in supply will differ according to the elasticities of supply and demand.

  Niobium is now imported from other countries

The last American niobium mine closed in 1959, and all U.S. niobium is now imported from other countries. This is bad for the United States because the U.S. must give money to other countries in order to obtain niobium. bad for the United States beca..

  Gasoline in inventory worth

The manager of Big Oil Company in Mandeville tells investors that at the end of 2006 they had gasoline in inventory worth $446. In 2007, Big Oil produced gasoline worth $353 and sold gasoline worth $217. How much did Big Oil add to Mandeville's GDP i..

  Elucidate the factors to consider as your fixed factor

Elucidate " "Clearly explain the factors to consider as your "fixed factor" and alternative short term and long-term decisions. Submit your analysis in a one to three page paper. "

  Use increasing cost or bowed outward production possibilty

Use the increasing cost or bowed outward production possibility frontier to explain why the sudden imposition of a national military draft in a nation with large numbers of college students would be politically unpopular. Would a voluntary, professio..

  The position of the demand for labor depends

Given the technology and the amount of other resources available, the position of the demand for labor depends on the

  What is total cost at profit-maximizing quantity of output

if the price is greater than the average variable cost and less than the average total cost at the profit-maximizing quantity of output in the short run, a perfectly competitive firm.

  Statements about indifference curves is true

Which of the following statements about indifference curves is true

  How many pineapples will she consume

how many pineapples will she consume? If her income increases to $120, how many grapefruits will she consume? Are grapefruits a normal or inferior good?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd