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    Currency Bid Rate Ask/Offer Rate: 1. 2. 3. 4. How Much CAD Received When Selling CHF10, 000,000? 5

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    Dinhphung Le
    1) The document provides exchange rate data and questions to calculate currency conversions and exchange rates. It asks to calculate the dollar cost of purchasing euros, British pounds, and Canadian dollars given exchange rates. 2) Additional questions using a currency exchange rate table ask to calculate currency amounts received or needed given purchases and sales of various currencies. 3) Questions also involve calculating implied purchasing power parity exchange rates for different currencies and determining if they are undervalued or overvalued relative to the US dollar. 4) The final questions involve calculating expected payables and receivables for a Vietnamese company in US dollars given hedging strategies and future exchange rate estimates.

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    Currency Bid Rate Ask/Offer Rate: 1. 2. 3. 4. How Much CAD Received When Selling CHF10, 000,000? 5

    Uploaded by

    Dinhphung Le
    259 views4 pages
    1) The document provides exchange rate data and questions to calculate currency conversions and exchange rates. It asks to calculate the dollar cost of purchasing euros, British pounds, and Canadian dollars given exchange rates. 2) Additional questions using a currency exchange rate table ask to calculate currency amounts received or needed given purchases and sales of various currencies. 3) Questions also involve calculating implied purchasing power parity exchange rates for different currencies and determining if they are undervalued or overvalued relative to the US dollar. 4) The final questions involve calculating expected payables and receivables for a Vietnamese company in US dollars given hedging strategies and future exchange rate estimates.

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    Original Title

    EXERCISE-WEEK13

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    1) The document provides exchange rate data and questions to calculate currency conversions and exchange rates. It asks to calculate the dollar cost of purchasing euros, British pounds, and Canadian dollars given exchange rates. 2) Additional questions using a currency exchange rate table ask to calculate currency amounts received or needed given purchases and sales of various currencies. 3) Questions also involve calculating implied purchasing power parity exchange rates for different currencies and determining if they are undervalued or overvalued relative to the US dollar. 4) The final questions involve calculating expected payables and receivables for a Vietnamese company in US dollars given hedging strategies and future exchange rate estimates.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    259 views4 pages

    Currency Bid Rate Ask/Offer Rate: 1. 2. 3. 4. How Much CAD Received When Selling CHF10, 000,000? 5

    Uploaded by

    Dinhphung Le
    1) The document provides exchange rate data and questions to calculate currency conversions and exchange rates. It asks to calculate the dollar cost of purchasing euros, British pounds, and Canadian dollars given exchange rates. 2) Additional questions using a currency exchange rate table ask to calculate currency amounts received or needed given purchases and sales of various currencies. 3) Questions also involve calculating implied purchasing power parity exchange rates for different currencies and determining if they are undervalued or overvalued relative to the US dollar. 4) The final questions involve calculating expected payables and receivables for a Vietnamese company in US dollars given hedging strategies and future exchange rate estimates.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    PART A:

    Question 1: By using below listed quotes, answer these questions:

    Currency Bid Rate Ask/Offer Rate


    EUR/USD 1.4438 1.4482
    GBP/USD 1.6343 1.6381
    USD/CAD 0.9552 0.9568
    NZD/USD 0.7824 0.7825
    USD/ZAR 6.6324 6.6407
    USD/JPY 84.72 84.73
    CHF/JPY 93.49 93.51
    1) What would be the dollar cost of purchasing EUR1, 000,000? (0.2 point)
    2) How much GBP you would receive in exchange for USD 1,000,000? (0.2 point)
    3) What is the CAD cost of acquiring 10,000,000 USD? (0.2 point)
    4) What is the EUR/NZD cross rate and ZAR/JPY cross rate? (0.2 point)
    5) How much JPY you would receive in exchange for CHF 1, 000,000? (0.2 point)

    QQuestion 2: Using the following exchange rate table from Bloomberg to answer the
    following questions.
    Currency Bid rate Offer rate
    1 EUR/USD 1.0913 1.0940
    2 USD/JPY 111.90 112.80
    3 GBP/USD 1.2899 1.3000
    4 AUD/USD 0.7536 0.7800
    5 USD/CAD 1.3662 1.4100
    6 USD/CHF 0.9956 1.0000
    7 EUR/CHF 1.2065 1.2220
    8 USD/HKD 7.7795 7.8750
    9 USD/VEB 1,950 1,980
    10 USD/MPX 11.43 12.00
    11 USD/BOB 1,400 1,420
    12 EUR/JPY 119.05 120.40
    13 MPX/BOB 118.00 119.50
    1. How much EUR received when selling HKD 10,000,000? (0.5 point)
    2. You have Bolivia peso, how much CAD you have when selling BOB 10,000,000 receipt?
    (0.5 point)
    3. You want to buy GBP 2,500,000. How much CAD you need? (0.5 point)
    4. How much CAD received when selling CHF10, 000,000? (0.5 point)
    5. Assume that you have 1,000,000 EUR. How much arbitrage profit can you generate by
    taking advantage of misalignment in the rates quoted above? (1 point)

    PART B:

    Question 1: Use the data in the table to complete the calculation of the implied PPP value of
    the currency versus the U.S. dollar and the calculation as to whether that currency is
    undervalued or overvalued versus the U.S. dollar
    Big Mac Index: January 2017
    (1) (2) (3) (4) (5)
    Country Big Mac Prices Actual Big Mac Implied PPP of Local Currency
    in Local Exchange Rate Prices in the Dollar Under/Over
    Currency (Jan, 2017) Dollars Valuation
    United States 5.00 - 5.00 1.00
    (USD)
    Vietnam (VND) 60,000 22,467.50
    China (RMB) 18 6.56
    Hong Kong (HKD) 19 7.75
    Singapore (SGD) 5 1.44
    Malaysia (MYR) 8 4.39
    Indonesia (IDR) 30,500 13,947.50
    Thailand (THB) 112 36.22
    Philippines (PHP) 131 47.02
    India (INR) 127 66.80
    Taiwan (TWD) 69 33.23
    Point 0.5 0.5 1.0

    Question 2:

    You are planning a 30-day vacation on Langkawi Island, Malaysia, one year from now. The
    present charge for a luxury suite plus meals in Malaysian ringgit (RM) is RM1, 050/day. The
    Malaysian ringgit presently trades at RM3.75/$. Hence, the dollar cost today for a 30-day stay
    would be $8,400. The hotel has informed you that any increase in its room charges will be
    limited to any increase in the Malaysian cost of living. Malaysian inflation is expected to be 4%
    per annum, while U.S. inflation is expected to be only 1%.
    Assumptions Value
    Charge for suite plus meals in Malaysian ringgit (RM) 1,050.00
    Spot exchange rate (RM/$) 3.7500
    US$ cost today for a 30 day stay $8,400.00
     
    Malaysian ringgit inflation rate expected to be 4.000%
    U.S. dollar inflation rate expected to be 1.000%
    1. How many dollars might you expect to need one year hence for your 30-day vacation? (1
    point)
    a. $6,478.00
    b. $8,484.00
    c. $5,380.00
    d. None of the above
    2. By what percent has the dollar cost gone up? Why? (1 point)
    a. 1%, U.S. inflation increases
    b. 2%, severe crisis in the Malaysian balance of payments
    c. 1.5%, Malaysian cost of living increases
    d. None of the above

    Question 4:

    THACO is one of the leading Vietnamese companies in automotive industry. THACO currently
    operates in auto manufacture, assembly, and distribution; provides auto spare part and
    maintenance services, including manufacturing, trading, and distributing commercial vehicles
    (trucks and buses), manufacturing and trading passenger cars from the brands including Kia
    (South Korea), Mazda (Japan), and Peugeot (France -Europe). Assume that in June 1st 2017,
    THACO has concluded an agreement with a Korean company for 12,860,700,000 KRW. All
    payment has to be in Korean Won. Moreover, with these inputs imported from Korea, THACO
    will produce, deliver its products throughout Vietnamese dealers and build up its estimated
    receivables in VND of 300 billion in the end of this year. With this VND-Receivable, THACO
    hopes to cover its payments by using two hedging strategies:
     For account payable:
    30% using options, 30% using forward and 40% using future
     For account receivable:
    25% using options, 25% using forward, 30% using future and 20% uncovered.
    Using the assumption below to calculate its payable account and receivables account in term of
    USD. (2 point)
    Assumptions Values
    Receivable due in 6 months 300,000,000,000 VND
    Payable due in 6 months 12,860,700,000 KRW

    Spot rate USD/KRW 1,124/1,126 USD/VND 22,727/22,990


    6 month-forward rate USD/KRW 1,128/1,130 USD/VND 23,100/23,500
    Put option on VND (premium 1%) USD/VND 22,750
    Call option on US dollars (premium USD/KRW 1,169
    1.5%)
    Future contract Open Settle
    $0.044559/1000VND $0.042553/1000VND
    $0.08929/100KRW $0.08700/100KRW
    WACC 9% 11%
    6 month-spot rate (estimated) USD/KRW 1,122/1,123 USD/VND 22,900/22,990

    Question 4

    Assume that the export price of a Nissan XTrail from Osaka, Japan is ¥3,250,000. The exchange
    rate is ¥112/$. The forecast rate of inflation in the United States is 2.2% per year and is 1.0% per
    year in Japan. Use this data to answer the following questions on exchange rate pass through.

    Steps Value

    Initial spot exchange rate (¥/$) 112

    Initial price of a Nissan XTrail (¥) 3,250,000


    Expected US dollar inflation rate for the coming year 2.200%
    Expected Japanese yen inflation rate for the coming year 1.000%
    Desired rate of pass through by Nissan 65.000%

    1) What is the export price for the XTrail at the beginning of the year expressed in U.S.
    Dollars? (0.5 point)
    2) Assuming PPP holds, what should the exchange rate be at the end of the year? (0.5 point)
    3) Assuming 100% pass-through, what should be the dollar price of an XTrail at the end one
    year? (0.5 point)
    4) Assuming 65% pass-through, what should be the dollar price of an XTrail at the end one
    year? (0.5 point)

    THE END

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