Assuming there are no transaction costs and supposing that £1
Use information from the table below to calculate the 30-day, 60-day and 180-day discount or premium for the Mexican peso.
Spot: MXN 1 = $13.3694
30-day forward: MXN 1 = $13.3488
90-day forward : MXN 1 = $13.2219
180-day forward: MXN 1 = $13.1888
Use information from the table below to calculate the 30-day, 60-day and 180-day discount or premium for the euro.
Spot: Euro 1 = $0.7931
30-day forward : Euro 1 = $0.7942
90-day forward: Euro 1 = $0.7943
180-day forward Euro 1 = $0.7948
3. Assuming there are no transaction costs and supposing that £1 = $1.563740 in New York, $1 = € 0.796178 in Paris, and €1 = £0.803199 in London, calculate the
arbitrage opportunities that exist based on these rates. (Briefly show or explain how you arrived at your solutions to get partial credit if one or more answers are
incorrect.)
4. Suppose Microsoft Corporation (Microsoft) receives quotes of $0.012524 (bid) and $0.012526 (ask) for the yen( ¥) and $0.033540 (bid) and $0.033541 (ask) for the
Taiwan dollar (NT$).
How many U.S. dollars will Microsoft receive from the sale of ¥60 million?
What is the U.S. dollar cost to Microsoft if it buys ¥1.2 billion?
How many NT$ will Microsoft receive for U.S. $700, 000?
How many yen will Microsoft receive for NT$400 million?
What is the yen cost to Microsoft of buying NT$82 million?
5. In a 2-3 page document, discuss reasons that MNCs list their shares on foreign capital markets.
