Estimated amount of dollars you will receive when converting

Assignment Help Financial Management

Reference no: EM131892396

IFE and Forward Rate. The one-year Treasury (risk-free) interest rate in the U.S. is presently 6%, while the one-year Treasury interest rate in Switzerland is 13%. The spot rate of the Swiss franc is $.80. Assume that you believe in the international Fisher effect. You will receive 1 million Swiss francs in one year.

a. What is the estimated amount of dollars you will receive when converting the francs to U.S. dollars in one year at the spot rate at that time?

b. Assume that interest rate parity exists. If you hedged your future receivables with a one-year forward contract, how many dollars will you receive when converting the francs to U.S. dollars in one year?

Reference no: EM131892396

Questions Cloud

Describe six criteria for selecting brand elements : Kotler and Keller describe six criteria for selecting brand elements. Pick a brand that you are familiar with (eg. BMW, Coca-Cola, Aeropostale).

Research regarding an aspect of airport security : Conduct an article research regarding an aspect of airport security in terms of technology, issues, human factors, legalities etc.

What should be the role of the police in dealing : What should be the role of the police in dealing with elements of neighborhood disorder,such as abandoned property, inoperative streetlights.

What technical or non-technical methods can be used : What technical or non-technical methods can be used to counteract this threat?

Estimated amount of dollars you will receive when converting : What is the estimated amount of dollars you will receive when converting the francs to U.S. dollars in one year at the spot rate at that time?

How treatment address bio-psycho-social needs of addiction : Assignment: Treatment Paper- What are the goals of treatment and how does treatment address the bio-psycho-social needs of addiction?

Define customer service level in context of inventory : Define customer service level in context of inventory management. Why is it not necessarily desirable to attempt to attain a 100% service level?

Expected to earn the highest return on the funds invested : Investment Implications of IRP and IFE. Based on this information, which person will be expected to earn the highest return on the funds invested?

Describe the four agencies of the department of justice : Thoroughly identified and described the major functions of the four (4) agencies of the Department of Justice.

User Account

All Pages