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

What is role of public warehouses in distribution channels, What is the rol...

What is the role of Public Warehouses in distribution channels? Public Warehouses: The public warehouses rent space to owners of inventory thus eliminating the requiremen

Describe the relevance of ethics and law in direct marketing, Question 1: ...

Question 1: (a) Discuss any five factors that need to be considered when drafting an offer. (b) Once the offer has been drafted, what could be done to make that offer more

Methods of setting the promotion budget, QUESTION a) "Increasingly, com...

QUESTION a) "Increasingly, companies are using direct marketing to reach carefully targeted customers more efficiently and to build stronger, more personal, one-to-one relation

Buying tickets, process of buying

process of buying

What is geographical segmentation, What is Geographical Segmentation? ...

What is Geographical Segmentation? Geographical Segmentation: In this segmentation, the market is divided through location as like nation’s states, regions, neighbourhood

Assignment, A manufacture of hardware products wants enter into new markets...

A manufacture of hardware products wants enter into new markets overseas. They are initially planning to market its products and establishing sales organizations in India, Banglade

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?

How is customer satisfaction measured in marketing, How is customer satisfa...

How is customer satisfaction measured in marketing? Customer satisfaction measures how suitably a company’s products or services convene or exceed customer expectations. Such e

Test marketing, what is test marketing?explain the various approaches that ...

what is test marketing?explain the various approaches that are followed by FMCG companies in test marketing.

Kinds of the packaging, Kinds of the packaging: 1. Consumer pa...

Kinds of the packaging: 1. Consumer package: it is a kind of the package which holds the required volume of product for the household consumption. For example, tooth

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages