A corporate treasury working out of vienna with

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A corporate treasury working out of Vienna with operations in New York simultaneously calls Citibank in New York City and Barclays in London. The banks give the following quotes on the euro simultaneously.Using $1 million or its euro equivalent, determine whether the corporate treasury could make geographic arbitrage profit with the two different exchange rate quotes.Bid ($/)Ask ($/)Bid ($/)Ask ($/)
Problem 5.13 Venezuelan Bolivar (A)a. Is this a devaluation or depreciation?b. By what percentage did its value change?AssumptionsValuesFixed rate of exchange, Bs/$778 New freely floating rate (2 weeks later), Bs/$1,025 a. Is this a devaluation or depreciation?Within weeks, its value had moved from the pre-float fix of BS778/$ to Bs1025/$.
b. By what percentage did its value change?
The Venezuelan government officially floated the Venezuelan bolivar (Bs) in February of 2002. Within weeks, its value had moved from the pre-float fix of BS778/$ to Bs1025/$.
Problem 5.14 Venezuelan Bolivar (B)a. What was the percentage change in January?b. Forecast value for June 2003?AssumptionsValuesExchange rate, January 1, 2003 (Bs/$)1,400 Exchange rate, February 1, 2003 (Bs/$)1,950 Forecast fall in value from Feb 1 to early summer, 2003-40.0%a) What was the percentage change in January?January 1st, 2003, the bolivar was trading at Bs1400/$. By February 1st, its value had fallen to Bs1950/$. Many currency analysts and forecasters were predicting that the bolivar would fall an additional 40% from its February 1st value by early summer 2003.
b) Forecast value for June 2003?
The Venezuelan political and economic crisis deepened in late 2002 and early 2003. On January 1st, 2003, the bolivar was trading at Bs1400/$. By February 1st, its value had fallen to Bs1950/$. Many currency analysts and forecasters were predicting that the bolivar would fall an additional 40% from its February 1st value by early summer 2003.
Problem 5.15 Indirect on the DollarQuoted90-dayPercent premiumAssumptionsSpot rateForward rateor discount on euroDays forward90 € 1.3300€ 1.3400Calculation formula for the indirect quote on the dollar:Percent premium = (S-F)/(F) x (360/90)-2.9851%The euro would be selling forward at a premium against the dollar, or equivalently, the dollar sellingforward against the euro at a discount.In a way, the terminology is a bit tricky. One might say that the "forward premium is a premium."Check calculation One way to check percentage change calculations is to invert each of the currency $0.7519 $0.7463 Percent discount = (F-S)/(S) x (360/90)-2.9851%Calculate the forward premium on the dollar (the dollar is the home currency) if the spot rate is €1.3300/$ and the 3-month forward rate is €1.3400/$.European euro (per $)quotes (1/(/$)), and recalculate the quote using the direct quotation formula.

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