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International Finance Take

Autor:   •  March 13, 2019  •  Term Paper  •  925 Words (4 Pages)  •  36 Views

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OOI XIU HUI 824785

International Finance Take Home Mid Term Test

Question 1

Cross Rate Calculations

Bank A                                                                         Bank B

1 USD=106.00 Yen                                                    1 AUD=83.00 Yen

1 USD=3.9000 MYR                                                   1 AUD= 3.0700 MYR

1 EURO=1.2400 USD

1 AUD=0.7850 USD

Therefore, 1 AUD=106 x0.7850 Yen

                                  =83.21 Yen

Bank A > Bank B

Therefore, 1 AUD = 3.9 X 0.785

            = 3.0615

Bank A < Bank B

   To make profit from Bank B , buy low, sell high.                  

- 1 AUD   +83.21 Yen (Bank A)                  +1 AUD  -3.0615 MYR

+1 AUD    - 83.00 Yen (Bank B)                 -1 AUD  +3.0700 MYR

 0 AUD    +  0.21 Yen                                                  + 0.0085 MYR

Bank C

1 EURO=4.87805 MYR

1 MYR=0.2050 EURO

From Bank A

1 EURO = 3.9 X 1.24 MYR

             = 4.8360

Bank C > Bank A

To profit,

-1 EURO  + 4.87805

+1 EURO  -4.8360

                   + 0.04205

Question 2

                                     [pic 1][pic 2][pic 3]

        Spot      1.2400[pic 4][pic 5][pic 6]

[pic 7]

        1.5%         2.0%

                           92/365                                                                                                           92/360  

[pic 8][pic 9]

[pic 10][pic 11]

                         Forward[pic 12]

        1.241643

Forward Rate= 1.241643

Forward Margin= 1.241643-1.2400

                            =0.001643

1 EURO is at a premium in forward market.

...

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