fbe436 hw4 solution

Fbe436 hw4 solution

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: UNIVERSITY OF SOUTHERN CALIFORNIA Marshall School of Business INTERNATIONAL FINANCIAL MANAGEMENT FBE 436 Aris Protopapadakis ANSWERS TO PROBLEM SET # 4: Multiple Choice Questions: 4.1 A German investor has DM 500,000 to invest for 1 year in US securities. One-year US Treasury bills offer a yield of 5% while German Treasury bills offer only 3%. What is the realized return on the investment after one year? a. b. c. d. e. 4.2 2% 3% 5% 8% We can’t say without additional information. A Japanese investor buys one-year US Treasury bills with a yield of 5%. The current FX rate is 120 ¥/$. What is the return on the investment if the exchange rate is 140 at the end of the year? a. b. c. d. e. 4.3 5.00% 16.67% 22.50% -10.00% -11.11% Assume that the current $/€ spot exchange rate is 0.8900 while a one month $/€ forward contract is quoted as 0.8891. a. b. c. d. e. The dollar is trading at a forward premium, the EUR at a forward discount. The dollar is trading at a forward premium, the EUR at a forward pr...
View Full Document

This note was uploaded on 01/16/2010 for the course FBE 436 at USC.

Ask a homework question - tutors are online