Differentiate between speculation and arbitraging, Marketing Management

Assignment Help:

QUESTION

a) Using illustrative and numerical examples, differentiate between speculation and arbitraging in the context of foreign exchange market.
b) One year borrowing and deposit interest rates are 12% and 10% respectively in the US and 10% and 8.89% respectively in Switzerland. The spot exchange rate for the US dollars is $14 to the Swiss Franc. The 12-month forward rate is $14.52. The economies are pegged together, and have been so for a number of years.

Required-

Suggest a way you might profit from the pricing inconsistency that is presented here, assuming you have no initial investment funds
Can the scenario above persist forever? Explain your answer
What should be the spot rate which would bring a no-arbitrage situation?

Related Discussions:- Differentiate between speculation and arbitraging

Caselets, Answer for a caselet

Answer for a caselet

Explain the term- fast-moving consumer goods, Explain the term- fast-moving...

Explain the term- fast-moving consumer goods Marketing communications which are undertaken by organisations within these systems can be regarded as a series of communication ep

How are functions of marketing program important, How are functions of mark...

How are functions of marketing program important? The initial task is to set realistic quantitative and qualitative interim and last targets for the marketing program and after

Consumer preference for co-branded financial product, please confirm me whe...

please confirm me whether the topic is apt to find dependency of consumer preference on products like max-bupa,tata aia, bajaj-allianz etc..

Explain about stero-typing in advertising, Q. Explain about Stero-typing in...

Q. Explain about Stero-typing in Advertising? Stereotyping demotes to presenting a group of people in certain roles only. Advertising has inward criticism for stereotyping wome

Marketing segmentation concepts , Describe the concept of market segmentati...

Describe the concept of market segmentation, targeting and positioning (STP''s) with a typical example of either a product or an organization you are familiar with.

Primary grouping of direct marketing, Primary grouping of direct marketing ...

Primary grouping of direct marketing 4Cs framework signifies the key characteristics and shows relative effectiveness of the tools of promotion across various different charac

Differentiating between Services and Goods, Differentiate between Services ...

Differentiate between Services and Goods and explain the areas in which the attributes of services create needs in the marketing mix?

Distinguish between quantitative and qualitative research, Question: Ma...

Question: Marketing Research plays a crucial role in any company. However, Marketing research is a time consuming and expensive process and therefore, requires careful plannin

Show the advantages and disadvantages of ecommerce, Question 1: Warigon...

Question 1: Warigon is a retail company and they want to automate the payment system. Consider that you are the design engineer of that company. What are the factors that yo

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages