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A. SHORT ANSWER (10 marks each). Write down your answer with all accompanying calculations. Assume that you are a retail customer. Use the information in the table below to answer the next 4...

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A.
SHORT ANSWER (10 marks each). Write down your answer with all accompanying calculations.
Assume that you are a retail customer. Use the information in the table below to answer the next 4 questions.
    
    
    Bid
    
    Ask
    
    
    
    Bid
    Ask
    S0($/€)
    
    $1.40 = €1.00
    
    $1.43 = €1.00
    
    i$
    
    4.10% APR
    4.20% APR
    F360($/€)
    
    $1.44 = €1.00
    
    $1.49 = €1.00
    
    i€
    
    3.50% APR
    3.65% APR
41) If you bo
owed $1,000,000 for one year, how much money would you owe at maturity?
42) If you had €1,000,000 and traded it for USD at the spot rate, how many USD would you get?
43) If you had €1,000,000 and took a position in USD in the forward market, how many USD would you get one year from now?
44) If you had €1,000,000 and lent for one year in the US market, how many USD would you get one year from now?
Answered Same Day Apr 13, 2020

Solution

Brijesh answered on Apr 15 2020
146 Votes
A.
SHORT ANSWER (10 marks each). Write down your answer with all accompanying calculations.
Assume that you are a retail customer. Use the information in the table below to answer the next 4 questions.
    
    
    Bid
    
    Ask
    
    
    
    Bid
    Ask
    S0($/€)
    
    $1.40 = €1.00
    
    $1.43 = €1.00
    
    i$
    
    4.10% APR
    4.20% APR
    F360($/€)
    
    $1.44 = €1.00
    
    $1.49 = €1.00
    
    i€
    
    3.50% APR
    3.65% APR
41) If you bo
owed $1,000,000 for one year, how much money would you owe at maturity?
When you bo
ow money, you are asking...
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