Determine the rate for a forward contract on the euro

Assignment Help Finance Basics
Reference no: EM13967610

1) The spot price of a euro in dollars is $0.9319. The U.S. interest rate (dollar LIBOR) for 90 days is 6.86875% and the euro rate (called EURIBOR) for 90 days is 4.467%. All interest calculations are done in the standard Eurodollar way, which is rate times days/360.
Determine the rate for a forward contract on the euro expiring in 90 days

2) A company called American Banking and Trading has entered into a long forward contract to buy 10 million British pounds at a price of $1.55. The contract has five months to go. The spot rate is currently $1.62. The British interest rate is 2.25% and the U. S. interest rate is 2.65%. Interest is calculated in the Eurodollar (add-on) manner. Determine the value of the contract.

Reference no: EM13967610

Questions Cloud

Income statement for the year ended : Income Statement for the Year Ended interest from money market account Aspen Ridge maintains its books using GAAP
Best represent the type of assortment the store carries : Target sells CDs, clothes, office supplies, shoes, food and so on, which of the following best represent the type of assortment the store carries?
Based on a market-product grid framework : Based on a market-product grid framework, which marketing strategy involves developing a single product for a single market?
What is the current i flowing into or out of the machine : What is the current i flowing into or out of the machine? What is the power flowing into or out of the machine? If the speed of the rotor were changed to 550 rad/s, what would happen to the current flow into or out of the machine?
Determine the rate for a forward contract on the euro : A company called American Banking and Trading has entered into a long forward contract to buy 10 million British pounds at a price of $1.55. The contract has five months to go.
What decisions are made at the corporate level : The NewShoes case provides background on the athletic shoe industry, and the condition of the company as your team takes over marketing for the firm. What decisions are made at the corporate level? What other decisions might you face as the simulat..
What business processes would it not need to develop : If AllRoad Parts were to use FBA, what business processes would it not need to develop? What costs would it save? If AllRoad Parts were to use FBA, what information systems would it not need to develop? What costs would it save?
Describe an interdisciplinary approach : Identify an important problem and describe an interdisciplinary approach to solving that problem - The university asks you to write on What your principal areas of academic interest? What are your career goals? in 30 to 250 words.
Business research methods : You have received a business research report done by a consultant for your firm, a life insurance company. The study is a survey of customer satisfaction based on a sample of 600. You are asked to comment on it quality. What will you look for.

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the weighted average flotation cost

The flotation costs are 11 percent for common stock, 10 percent for preferred stock, and 7 percent for debt. The corporate tax rate is 37 percent. What is the weighted average flotation cost?

  Estimate what change in interest rates next year

Estimate what change in interest rates next year would lead to the bank's return on equity being reduced to zero. Assume that the bank is subject to a tax rate of 30%.

  Compare the performance of a given set of portfolios

Lets extend the discussion by examining the practical implications of these concepts. Under what circumstances would it make sense to use the Treynor measure to compare the performance of a given set of portfolios?

  What does it mean when it is said the us is running a

what does it mean when it is said the u.s. is running a trade deficit? what impact do you think a trade deficit could

  Explain the logic behind the establishment of the gold

1. explain the logic behind the establishment of the gold standard. why did the gold standard finally come to an

  Determine the single greatest challenge to a small business

Determine the single greatest challenge to a small business' working capital. Identify at least two (2) methods this small business could use to address the identified challenge. Provide a rationale for each method that you identified.

  Difference between the healthcare maintenance organization

Discuss the difference between the healthcare maintenance organization, preferred provider organization, point of service plan, health savings accounts, and health reimbursement arrangements.

  Lee 2001 rejects the naive view of market efficiency

lee 2001 rejects the naive view of market efficiency. explain. if lee is correct what are the implications for capital

  Calculate the range for the npv given each scenario

The company has estimated expected cash inflows for three scenarios: pessimistic, most likely, and optimistic. These expected cash inflows are listed in the following table. Calculate the range for the NPV given each scenario.

  What is the value of this endowment in today dollars

The first $4M will start today; at the end of 5 years, the hospital will also receive a lump sum payment of $18M. Assuming the cost of money is 3%, what is the value of this endowment in today's dollars?

  What is the present value of an annuity of 3n payments

What is the present value of an annuity of 3n payments of $R in terms of the present value of the annuity of n payments?

  What is the present value of kodaks growth opportunities

Given Kodak's plowback policy, the market believed that Kodak could continue to generate 15 percent return on investment and would maintain its payout policy. Given these beliefs, what was a fair price for Kodak in 1970 immediately after it paid its ..

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