Given data below Spot rate 1$= Rs 64 Interest rate prevailing in India = 12% Interest rate

Fantastic news! We've Found the answer you've been seeking!

Question:

Given data below

Spot rate 1$= Rs 64

Interest rate prevailing in India = 12%

Interest rate prevailing in US = 7%

Fair Forward Rate (FFR) (1 Year): $1 = Rs 6.99

Actual Forward Rate (AFR) (1 Year): $ 1 =Rs 5.90

Determine the possible Arbitrage Gain

Related Book For answer-question

Income Tax Fundamentals 2013

ISBN: 9781285586618

31st Edition

Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill

See More Books

Posted Date: Apr 18, 2023 05:59 AM

See More Questions

KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
Strawberry Mansion Company produced 5,900 cakes that require 3 standard pounds per unit at $2.00 standard price per pound for a total of $35,400. The company actually used 17,880 pounds in production...
Carol Harris, Ph.D, CPA, is a single taxpayer and she lives at 674 Yankee Street, Durham, NC 27409. Her Social Security number is 793-52-4335. Carol is an Associate Professor of Accounting at a local...
Discuss the two-pipe system, how it works, and its advantages and disadvantages.
The budget committee of Earnhart Company collects the following data for its Del Fuego Store in preparing budgeted income statements for May and June 2013. 1. Sales for May are expected to be...
A centrifuge in a medical laboratory rotates at an angular speed of 3,800 rev/min. When switched off, it rotates through 48.0 revolutions before coming to rest. Find the constant angular acceleration...
What are the functions in executing and recording these two classes of transactions and custody of related assets?
The following information relates to Mucktar Ltd. during the first quarter of 2015: Additional data: a. On January 1, there were 2,000 units on hand. b. Fixed overhead cost is $3.00 per unit and is...
1. Pertimbangkan satu cakera dengan 2000 silinder, bernombor 0 hingga 1999. Anggapkan kedudukan kepala semasa, berada di silinder 500. Giliran permintaan diberi seperti berikut: Consider one disk...
In this mini-case, you will complete the test of details on accounts receivable for the 2019 audit of EarthWear Clothiers, Inc. The principal test of detail involves sending "confirmations" or...
3. (a) Explain each assumption needed for the OLS estimators in a multiple linear regression model to be unbiased. (8 pts.) (b) Explain each assumption needed for the OLS estimators in a multiple...
A bank is considering purchasing partial ownership in a firm. The bank has $100 in cash, $250 in debt (due in one year), and an additional underlying asset that will be worth either $0 ("low") or...
5. Solve the equations AX=Y, where: 13 -8 -3 [20 X1 10-1,Y=-5, X = X2 A=-8 -3-1 -1 11 0 X3 Attach the results
Your beginning salary is $68,000. You deposit 8% each year in a savings account that earns 3% interest. Your salary increases by 5% per year and inflation is 2.5% per year. What value does your...
Adams Company makes a product that sells for $ 3 3 per unit. The company pays $ 1 9 per unit for the variable costs of the product and incurs annual fixed costs of $ 1 3 7 , 2 0 0 . Adams expects to...
5. XYZ Limited was incorporated on January 4, 1985. The entity's reporting date is December 31st of each year. On the date of incorporation, the entity issued 100,000,000 ordinary shares with a par...
On July 1, 2021, Browning Company purchased equipment for use in its manufacturing process. The equipment cost $865,000, has a useful life of 5 years, and has a salvage value of $90,000. The company...
Refer to the data for problem 13-36 regarding Long Beach Pharmaceutical Company. Required: Compute each division's residual income for the year under each of the following assumptions about the...
Bea Jones (age 32) moved from Texas to Florida in December 2011. She lives at 654 Ocean Way, Gulfport, FL 33707. Bea's Social Security number is 466-78-7359 and she is single. Her earnings and income...
Bev and Ken Hair have been married for 3 years. They live at 3567 River Street, Springfield, MO 63126. Ken is a full-time student at Southwest Missouri State University (SMSU) and Bev works as an...
Greg died on July 1, 2012, and left Lea, his wife, a $50,000 life insurance policy which she elects to receive at $5,000 per year plus interest for 10 years. In the current year, Lea receives $6,200....
Two reversible heat engines $A$ and $B$ are arranged in series. A rejects heat directly to $B$. Engine $A$ receives $300 \mathrm{~kJ}$ at a temperature of $500^{\circ} \mathrm{C}$ from...
A heat pump is used to maintain an auditorium hall at $25^{\circ} \mathrm{C}$ when the atmospheric temperature is $-5^{\circ} \mathrm{C}$. The heat load is $2400 \mathrm{~kJ} / \mathrm{min}$....
An engine manufacturer claims to have developed a heat engine with the following specifications : Power developed $=75 \mathrm{~kW}$; Fuel burnt $=5 \mathrm{~kg} / \mathrm{h} ;$ Heating value of...

Given data below Spot rate 1$= Rs 64 Interest rate prevailing in India = 12% Interest rate

Question:

Expert Answer:

To check if there is an arbitrage opportunity we can compare the fair forward rate with the actual f... View the full answer

Income Tax Fundamentals 2013

Students also viewed these finance questions