Formula 453-Madura

Formula 453-Madura - (X-M(CI-CO(FI-FO FXB =...

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Unformatted text preview: (X-M) + (CI-CO) +(FI-FO) + FXB = BOP∑∑∑∑====+×=×=+=nttmjtjtjmjtjtjtntttkERECFEVERECFECFEkCFEV11,,1,,$,1$,)1()]()([)]()([)()1()(100* n360* SSF=fnFC-FRL 453Multinational Financial ManagementFormula Sheet211221121221:$:$::$:$://$/$FCBidFCAskFCFCAskFCAskFCBidFCFCBidFCFCFCFCRateExchangeCross====AskBid-Ask=SpreadAskBid/100* SS-S=Sttt11%--∆fhfhiiSSFSFii-2245-=+=++=+ρρρ)1()1()1()1(PSPFC$=*$PIPI=SFC)i+(1i-i=SS-SFCFCStt1+t)1()1($1FCttSSππ++=+)1($11FCFCtttSSSπππ+-=-++Note:Variable “S” represents direct quotation of exchange rate. The Textbook uses “e” instead of “S”, so “e” and “S” are interchangeable in the equations.)i+(1)i+(1=SFFC$t1+tt,)i+(1ii=FFSFCFCttt1+tt,--+$1,)i+(1ii=SSFFCFCtt1+tt,--$i = r + Π+ rΠi$= r$+ Π$; iFC= rFC+ ΠFCP%Q%=Edp∆∆CC* E=EFC$$N$RBuyer of Call Option: Profit/Loss = Spot Rate – (Strike Price + Premium)Writer of Call Option: Profit/Loss = Premium –(Spot Rate –Strike Price)...
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This note was uploaded on 04/03/2011 for the course ECON 490 taught by Professor Professorjohns during the Spring '09 term at Liberty.

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Formula 453-Madura - (X-M(CI-CO(FI-FO FXB =...

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