Given the following interest and exchange rate quotes, a foreign exchange trader at Morgan Stanley (NYSE:MS)...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Given the following interest and exchange rate quotes, a foreign exchange trader at Morgan Stanley (NYSE:MS) concluded that it is NOT possible to make an arbitrage profit through covered interest arbitrage with the Australian dollar and Thai baht. Spot exchange rate: Thai baht interest rate: Australian dollar interest rate: 24.50 bahts per one Australian dollar 1.00% per year 2.00% per year What must have been the baht per Australian dollar 12-month forward rate at that time? Given the following interest and exchange rate quotes, a foreign exchange trader at Morgan Stanley (NYSE:MS) concluded that it is NOT possible to make an arbitrage profit through covered interest arbitrage with the Australian dollar and Thai baht. Spot exchange rate: Thai baht interest rate: Australian dollar interest rate: 24.50 bahts per one Australian dollar 1.00% per year 2.00% per year What must have been the baht per Australian dollar 12-month forward rate at that time?
Expert Answer:
Answer rating: 100% (QA)
To determine the 12month forward rate for the Thai baht per Australian dollar we can use the Co... View the full answer
Related Book For
Fundamentals of Multinational Finance
ISBN: 978-0205989751
5th edition
Authors: Michael H. Moffett, Arthur I. Stonehill, David K. Eiteman
Posted Date:
Students also viewed these finance questions
-
Assume we change the Stop-and-Wait Protocol to include a NAK (negative feedback), which is used only when a corrupted frame arrives and is discarded. Redraw Figure 11.9 to show this change. Figure...
-
The U.S. Court of Appeals for the Fourth Circuit affirmed the lower court ruling in the case Public Employees Retirement Association of Colorado; Generic Trading of Philadelphia, LLC v. Deloitte...
-
At a point in time, foreign exchange arbitrageur noticed that the Japanese yen to U.S. dollar spot exchange rate was $:= 108 and the three-month forward exchange rate was $: = 107.30. The three-month...
-
The two tugboats each exert a constant force F on the boat such that these forces are always directed perpendicular to the boats centerline. If the boat has a mass m and a radius of gyration k G...
-
Create a secret message by encoding each character of a string into a number using ord.
-
In Problems 14, determine which of the given viewing rectangles result in a square screen. Xmin = 5 Ymin = 4 Xmax = 5 Ymax = 4 Xscl = 1 Yscl = 1
-
Read about the ZZZZ Best Carpet Cleaning fraud. What schemes did the fraudsters use?
-
Morrow Enterprises Inc. manufactures bathroom fixtures. The stockholders equity accounts of Morrow Enterprises Inc., with balances on January 1, 2014, are as follows: Common Stock , $20 stated value...
-
MIRR A project has an initial cost of $59,250, expected net cash inflows of $13,000 per year for 9 years, and a cost of capital of 9%. What is the project's MIRR? Do not round intermediate...
-
What motivates a parent to bribe key people to get their kid admitted to a prestigious university? That is the ethical question of Operation Varsity Blues. In March 2019, the story broke of an...
-
nalyze how validity in psychometrics,is different from a validity scale in a test of personality. Describe this difference in terms of their definitions. Provide at least two examples of validity...
-
What is the balance delay of an assembly line that is 65% efficient?
-
After performing a bank reconciliation, journal entries are required for a. all items on the bank side of the reconciliation. b. all items on the book side of the reconciliation. C. all items on the...
-
An assembly line must create one finished product every 90 seconds. The sum of the task times required to create a product is 295 seconds. If one design for this assembly line uses four workstations,...
-
If the multifactor productivity measure of one electrical generation plant is 12.934, while the same measure when calculated for a second plant is 12.023, which plant is more productive?
-
A road-paving crew required 8 hours to repave a 3-mile stretch of road, using \($5,000\) in materials. The crew consisted of three workers who each earn \($25\) an hour. Calculate a multifactor...
-
Q17. What is the geometric average return of an asset that had the following returns: Year Return 5% 3 5 NMJ D 2 -12% -3% 0% 18%
-
Calculate the number of neutrons of 239Pu.
-
Aquatech is a U.S.-based company that manufactures, sells, and installs water purification equipment. On April 11, the company sold a system to the City of Nagasaki, Japan, for installation in...
-
Doohicky Devices, Inc., manufactures design components for personal computers. Until the present, manufacturing has been subcontracted to other companies, but for reasons of quality control Doohicky...
-
Kingdom Enterprises is a Hong Kong-based exporter of consumer electronics and files all of its financial statements in Hong Kong dollars (HK$). The company's European sales director, Phillipp Bosse,...
-
A You are presented with the following information from the Seneley group of companies for the year to 30 September \(19 X 6\) : \section*{Additional information:} (a) The authorised, issued and...
-
A You are to draw up a consolidated balance sheet as at 31 December \(19 \times 3\) from the following: At the balance sheet date S1 owed P \( 2,000\) and S2 \( 500\), and P owed S2 \( 1,800\). P had...
-
A You are presented with the following summarised information relating to Block plc for the year to 30 September \(19 X 8\) : \section*{Additional information:} 1 Block purchased 80 per cent. of the...
Study smarter with the SolutionInn App