fbpx

Futures & options | Business & Finance homework help

Table of Contents

Don't use plagiarized sources. Get Your Assignment on
Futures & options | Business & Finance homework help
Just from $13/Page
Order Now

 

FX Markets – Spot and Forwards

 

 

Multiple Choice: #s 1-3

1. The forward Indian Rupee, relative to $, given spot rate of Rps 48.50 and a 3 month forward rate of Rps 50.00 is closest to (annualized): 

a. 12 % premium (approx.)                  b. 12.37% discount                 c. 12.37% premium

d. 12% discount (approx.)                  e. 2.91% discount     

 

2. The bid-ask spot rate is quoted as Real 1.8400 -1.8550 per dollar. I want to exchange $500 for real. How many reals will I get?

a. 271.74                                 b. 920                          c. 927.50         d. 269.54

 

3. Based on Interest Rate Parity in pesos per dollar terms, larger the difference with which peso interest rate exceeds the dollar interest rate, the:

  1. larger will be the forward discount on the peso
  2. larger will be the forward premium on the peso
  3. smaller will be the forward premium on the peso
  4. smaller will be the forward discount on the peso

 

4. Interest Rate Parity:

The spot rate on the Brazilian real is quoted at $0.5555 and the six month forward rate at $0.5955. Is the real at a forward premium or discount and how much per annum?

 

5.  In the above problem, is the dollar at a premium or discount and how much per annum?

 

6.  Assume that the annualized interest rates are 3% in U.S. and 8% in Brazil. Is arbitrage profit possible under covered Interest Rate Parity? Why?

 

7. If the two interest rates are as shown in problem 6 and the spot rate is $0.5555 per real as shown in problem 5, what should be the six-month forward rate so that there is no arbitrage profit possible?

 

8. Non-deliverable forwards:    The spot rate for Argentina peso is P2.75/$ and the six-month forward rate is P2.90 /$. The actual rate settles six months later at P2.85/$. If you entered a six month non-deliverable forward contract today to buy P29 million, what is your gain or loss 6 months later?

 

Futures & Options

 

1.Speculation:     Today is January 24 and you go long 1 real March futures at an opening trade price of $0.6423 per real with an initial margin of $1,500. The settlement prices for January 24, 25 and 26 are $0.6393, $0.6441 and $0.6496 per real respectively. On January 27 you close out your contract at $0.6483 per real.

(a) Calculate your daily account position and

(b) Find the ending account balance on January 27 at liquidation

(size of contract = real 125,000)

 

2. Futures Hedging:               On March 15, a US firm is planning to import Russian vodka worth 5 million rubles due on April 15. Firm decides to hedge its payables position by using June ruble futures traded on CME. The spot rate on March 15 is US $0.0330/ruble and the June futures price on March 15 is at $ 0.0300/ruble. On April 15, the spot rate is $0.0380 / ruble while the June futures is $ 0.0350 / ruble. 

(a) Calculate the net gain or loss from the futures? 

(b) What is the net cost to the importer?

 

3. Options Hedging:               On March 15, a US firm is planning to import Indian software worth Rs. 1 million due on April 15 (one day later). Firm decides to hedge its payables position by using OTC April 15 call option on the rupee.

The spot rate is US $0.0220/rupee and the April call for X= $ 0.0200 / rupee is quoted at $0.0010/rupee. On April 15, the spot rate settles at $ 0.0190 / rupee.

What is the cost of the call option in dollars?

Do you exercise the call or not?

What is the dollar payables from options hedging?            

 

4.     A U.S. firm can hedge its South African rand receivables against depreciation by:

a. selling rand futures                                 b. buying rand futures

c. buying rand forward                               d. none of the above

                                           

===================================================================

 

 

 

 

Calculate the price
Make an order in advance and get the best price
Pages (550 words)
$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with Homework Writing Services
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Health Care
It is exactly my expectation. Thank you.
Customer 454755, June 30th, 2020
English 101
i received the paper early
Customer 461063, November 1st, 2022
History
The work is of really good quality and was done on time.
Customer 454439, June 1st, 2020
Other
Excellent work.
Customer 459155, June 7th, 2022
Home Repair & Home Maintenance
Well researched
Customer 463473, November 4th, 2022
Other
Good follow-up task.
Customer 459155, April 7th, 2022
Military
Very good job, thanks.
Customer 456821, December 20th, 2022
Accounting & Finance
good work
Customer 452441, April 12th, 2022
Finance
Thank You
Customer 462669, March 11th, 2022
Business
Excellent work. Looking forward to working with your in the future.
Customer 463467, November 11th, 2022
Art (Fine arts, Performing arts)
Good job.
Customer 462997, May 18th, 2022
Business Studies
Good
Customer 453413, April 19th, 2020
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend
OUR GIFT TO YOU
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat