How would speculation be undertaken using the spot market

Assignment Help Finance Basics

Reference no: EM131325228

The spot rate for the Danish krone is USD0.1500 and the three-month forward rate is USD0.1505. Your company is prepared to speculate that the Danish krone will move to USD0.1650 by the end of three months.

(a) Are the quotations given direct or indirect Copenhagen quotations?

(b) How would the speculation be undertaken using the spot market only?

(d) If your company were prepared to put USD1m at risk on the deal, what would the profit outturns be if expectations were met? Ignore all interest rate implications.

Reference no: EM131325228

Questions Cloud

Explain several dimensions of the shareholder-principal : To mitigate agency problems between senior executives and shareholders, should the compensation committee of the board devote more to executive salary and bonus (cash compensation) or more to long-term incentives? Why? What role do

What forward rate would yield an equilibrium situation : Assuming that interest rates and the spot exchange rate remain as above, what forward rate would yield an equilibrium situation?

Describe a situation that you have faced recently : Using concepts from the assigned readings, define what a theory is. Describe how you can know if a theory is valid. Offer one example of how a personal belief may differ from a theory.Identify and define each of the three dominant ethical theories ..

Create a policy that would benefit your organization : Consider the organization where you work, or an organization where you would like to work if you are not currently employed. Create a Policy that would benefit your organization.

How would speculation be undertaken using the spot market : Are the quotations given direct or indirect Copenhagen quotations?- How would the speculation be undertaken using the spot market only?

How has modern technology impacted peoples views on ethics : Looking at the impact of technology (computers, the Internet, smartphones, etc.) on American society, how has modern technology impacted people's views on ethics?

Write a page summary of your conversation with jim : Imagine you work at a company and it is time for an employee named Jim's annual review. While he was a model employee the first nine (9) months of the year, recently Jim has been coming in late. It has not been just a few minutes each day, either...

Calculate the outright quotes for one and six months forward : Calculate the outright quotes for one, three and six months forward.- If the treasurer wished to buy Ruritanian doppels three months forward, how much would he or she pay in dollars?

Write another python program to decode the encoded message : Write another Python program to decode the encoded message according to the "circular Caesar cipher" problem presented in Programming Exercises 7 and 8 of Book Chapter 5.

User Account

All Pages