# Assume that you are a retail customer use the

• 12
• 100% (1) 1 out of 1 people found this document helpful

This preview shows pages 11–12. Sign up to view the full content.

Assume that you are a retail customer. Use the information in the table below to answer the next 4 questions. Bid Ask Bid Ask S 0 (\$/€) \$1.40 = €1.00 \$1.43 = €1.00 i \$ 4.10% APR 4.20% APR F 360 (\$/ €) \$1.44 = €1.00 \$1.49 = €1.00 i 3.50% APR 3.65% APR 41) If you borrowed \$1,000,000 for one year, how much money would you owe at maturity? Borrowed \$1,000,000 for one year, Interest rate = 4.2% Amount due after 1: \$ 1,000,000 X 1.0420 = \$ 1,042,000 42) If you had €1,000,000 and traded it for USD at the spot rate, how many USD would you get? We have €1,000,000, we sell euro at \$1.40 = €1.00 \$1.40 €1,000, 000 X ——— = \$ 1,400,000 €1.00

This preview has intentionally blurred sections. Sign up to view the full version.

43) If you had €1,000,000 and took a position in USD in the forward market, how many USD would you get one year from now? This means we will sell euros forward at 1.44 \$ received = €1,000,000 X 1.44 = \$ 1,440,000 44) If you had €1,000,000 and lent for one year in the US market, how many USD would you get one year from now? \$1.40 = €1.00 and I had €1,000,000, Converting euros today we get \$1,400,000, Invest = 4.1% USD after 1 year = \$1,400,000 X 1.041 = \$1,457,400
This is the end of the preview. Sign up to access the rest of the document.
• One '16
• robert bai
• Exchange Rate, Foreign exchange market, United States dollar

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern