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

#titsecondary source, list out the secondary sources of information while p...

list out the secondary sources of information while pursuing market research?

What is marketing transaction, What is marketing transaction? A marketi...

What is marketing transaction? A marketing transaction is one in that the buyer and the seller, not individual of the nature of the product, skill mutual satisfaction the selle

Programme in marketing, the buying situation characterised by low consumer ...

the buying situation characterised by low consumer involvement but are significantly brand loyal are known as..

Explain about the foreign production in marketing, Explain about the foreig...

Explain about the foreign production in marketing. Foreign production: Moreover exporting, other market entry strategies comprise licensing, joint ventures, participatio

Inflation, Inflation The overall and general increment in price level f...

Inflation The overall and general increment in price level for goods and services in a particular economy. Inflation can be viewed by a raise in the general cost of living or a

Market segmentation and targeting, You are needed to complete the following...

You are needed to complete the following piece of work: 'Bodyproud Fitness' is a relatively new health and fitness company based in Huddersfield. The company was produced in res

What are focus and drawback of production concept, What are focus and drawb...

What are focus and drawback of production concept? Production Concept: Focus: The focus of the firms subsequent the production concept is on lowering the cost of product

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.

Describe the key pricing strategies of marketing, "The service industry is ...

"The service industry is customer driven, and marketing thus focuses on the needs of the customer and involves finding out what the customer wants and expect first, before any atte

What is multi brand, What is Multi Brand? Multi Brand: Company fr...

What is Multi Brand? Multi Brand: Company frequently introduce additional brands into the similar category. This branding offers a way to establish various features and a

Write Your Message!

Captcha
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