BUS428 test 1

BUS428 test 1 - 1. Relative to the spot price, the forward...

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1. Relative to the spot price, the forward price will be a. Usually less than the spot price b. Usually greater than the spot price c. Usually equal to the spot price d. Usually less than or greater than the spot price more often it is equal to the spot price 2. The UD/$ spot exchange rate is AUD1.60/$ and the SF/$ is SF1.25/$. The AUD/SF cross exchange rate is: a. 0.7813 b. 2.0000 c. 1.2800 d. 0.3500 3. The Singapore dollar-US dollar (S$/$) spot exchange rate is S$1.60/$, the Canadian dollar-US dollar (CD/$) spot rate is CD1.33/$ and the Singapore dollar-Canadian dollar (S$/CD) spot rate is S$1.15/CD. Determine the triangular arbitrage profit that is possible if you have $1,000,000. a. $44,063 profit b. $46,093 loss c. No profit is possible d. $46,093 profit 4. The forward market a. Involves contracting today for the future purchase or sale of foreign exchange at the spot rate that will prevail at the maturity of the contract b. Involve contracting today for the future purchase or sale of foreign exchange at a price agreed upon today c. Involves contracting today for the right but not obligation to the future purchase or sale of foreign exchange at a price agreed upon today d. None of the above 5. Suppose the spot rate and forward rate for the British pound are $1,4248 and $1.4179 respectively. Assume the forward pound is selling at a 1.94% annualized discount, what is the number of days of the forward contract? a.
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This note was uploaded on 04/03/2012 for the course BUS 428 taught by Professor Xu during the Spring '11 term at Rhode Island.

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BUS428 test 1 - 1. Relative to the spot price, the forward...

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