You're a FX trader working in Japan. The following prices were observed in the market. Bid...
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You're a FX trader working in Japan. The following prices were observed in the market. Bid Spot rate (Yen/USD) 1-year Forward rate (Yen/USD) Yen interest rate % p.a. USD interest rate % p.a. 1 a) Present the attempt to make an inward arbitrage transaction using the rectangular diagram. Correctly indicate the arrow direction (clockwise/anti-clockwise), and show the required 4- step transactions (workings) for each arrow. You MUSI choose the correct bid or ask price for each transaction. Please start with 1,000 unit of currency, and use 4 decimal points. (Note: For every working, show the numbers with currency symbols) (4 marks) 108.78 107.60 0.10 Ask 1.02 108.92 107.75 0.15 1.50 b) is an inward arbitrage transaction a profitable opportunity? (i.e. did you make a profit or loss with inward arbitrage?). Compute the rate of return of this transaction. (1 mark) You're a FX trader working in Japan. The following prices were observed in the market. Bid Spot rate (Yen/USD) 1-year Forward rate (Yen/USD) Yen interest rate % p.a. USD interest rate % p.a. 1 a) Present the attempt to make an inward arbitrage transaction using the rectangular diagram. Correctly indicate the arrow direction (clockwise/anti-clockwise), and show the required 4- step transactions (workings) for each arrow. You MUSI choose the correct bid or ask price for each transaction. Please start with 1,000 unit of currency, and use 4 decimal points. (Note: For every working, show the numbers with currency symbols) (4 marks) 108.78 107.60 0.10 Ask 1.02 108.92 107.75 0.15 1.50 b) is an inward arbitrage transaction a profitable opportunity? (i.e. did you make a profit or loss with inward arbitrage?). Compute the rate of return of this transaction. (1 mark)
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Certainly Lets walk through the steps of an inward arbitrage transaction using the provided bid and ... View the full answer
Related Book For
International Marketing And Export Management
ISBN: 9781292016924
8th Edition
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
Posted Date:
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