Mary smyth is a foreign exchange dealer for a bank in new, Ask an Expert

Finance

Mary Smyth is a foreign exchange dealer for a bank in New York City. She has $1,000,000 for a short-term money market investment and wonders if she can execute a covered interest arbitrage investment in the Swiss Franc. She face the following rates:

Spot exchange rate: SF1.1520/$

3-month forward rate: SF1.1472/$ 3-month

U.S. interest rate: 4.5% per annum (1.125% quarterly)

3-month Swiss interest rate: 3.2% per annum (0.8% quarterly)

a. Is there a covered interest arbitrage opportunity?

b. What would be the total amount of Swiss francs (principal plus interest) in her Swiss bank account after 3-month deposit period?

c. What would be her final total US dollar amount?

View complete question

Financial Management, Finance

Category:- Financial Management
Reference No.:- M92727131

Have any Question?Write your Review or question?

Related Questions in Financial Management

Launching a new product linefor this portfolio project

Launching a New Product Line For this Portfolio Project Option, you will act as an employee in a large company that develops and distributes men's and women's personal care products. The company has developed a new produ ...

Assignment -complete a research topic and prepare a

Assignment - Complete a research topic and prepare a write-up, and a presentation. SECTION A: Financial Analysis and Pricing Select a portfolio of five firms from the industry of your choice. Please then see me for appro ...

Assignmentassignment purposes1 evaluate the characteristics

Assignment Assignment Purposes: 1. Evaluate the characteristics of e-commerce. 2. Demonstrate effective use of technology for communication. 3. Evaluate the effectiveness of an e-commerce Web site. 4. Explain the securit ...

The following examination is due no later than 9 am monday

The following examination is due no later than 9 AM Monday, October 22nd. You are to email me the exam in an XLSX file named after yourself and containing your section. For example, if your name is Leslie King, the file ...

International business letterabout frac34 of a page to one

International business Letter About ¾ of a page to one full page business letter (formatting as researched culture may dictate) + several paragraphs of rationale One of the great things about entering a field under the s ...

Read through the tree trimming project case in chapter 13

Read through the Tree Trimming Project case in chapter 13 of the textbook. This case refers to the earned value (EV) of the owner, Will Fence's Tree Trimming business. Will briefly describes his techniques for EV. Based ...

Working capital management mini-casesyou may do this case

Working capital management mini-cases You may do this case alone or with up to two others. If you work with others, please submit only one assignment, but be sure it includes all names. Except for cases E and F, each cas ...

Questions 1 when can there arise a conflict between

Questions 1. When can there arise a conflict between shareholders and managers goals? How does wealth maximization goal take care of this conflict? 2. A company has just tested the market for a new product. The test indi ...

Part a-budgeting amp financial analysisassume the following

Part A-Budgeting & Financial Analysis Assume the following data for Spring Break Corp: Statement of Income: Balance Sheet: 2017 ...

Tax brackets and deductionsconduct online research for

Tax Brackets and Deductions Conduct online research for federal income tax brackets for the current year. Which tax bracket do you fit into for your gross household income? How close is your gross household income to the ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Financial Management Expert