User Account

All Pages

Calculate the forward premium in percentage

Assignment Help Finance Basics
Reference no: EM132580143

In Canada the inflation rate is 3.5%, and the interest rate is 5%, while in the US the inflation rate is 1% and the interest rate is 2%. The spot exchange rate of Canadian dollar is US$0.8137/CA$. Assume the interest parity holds.

A. Calculate the forward premium (or discount) in percentage for Canadian dollars based on interest rate parity. Please provide the formula used and state your answer in a percentage.

B. Indicate whether the Canadian dollar forward rate carries a premium or a discount.

Reference no: EM132580143

Questions Cloud

Describe interest rate fundamentals : Describe interest rate fundamentals, the term structure of interest rates, and risk premiums.
Analyze and record the journal entries for transaction : Analyze and record the journal entries for following transactions. August 1 Joseph Eetok , the owner, invested $20,000 cash into the business
Calculate the appropriate cross rate of pound : Assume the following information for a bank quoting on spot exchange rates:
Prepare ledger accounts to record the transaction : Prepare ledger accounts to record the transaction.On 1 August, it was decided to issue 300 000 ordinary shares on the following terms
Calculate the forward premium in percentage : In Canada the inflation rate is 3.5%, and the interest rate is 5%, while in the US the inflation rate is 1% and the interest rate
Strategy formulation and strategy implementation : What is the difference between strategy formulation and strategy implementation? What are the different levels of strategy?
Explain how the bank of england conducts : Explain how the Bank of England conducts a sterilized intervention to increase the value of the pound against the US dollar
Compute the companys price-earnings ratio : The companys share price is $12.66 and the company has 315,270 shares outstanding. Compute the companys price-earnings ratio up to two decimal places.
Explain how sound is produced by your school bell : How does the sound produced by a vibrating object in a medium reach your ear? Explain how sound is produced by your school bell

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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