Exam (elaborations)
FIN4802 NEW Assignment 1 Solutions (SEM 1 2022)
- Course
- Institution
FIN4802 NEW Assignment 1 Solutions (SEM 1 2022). 100% TRUSTED workings, explanations and solutions. 4 for assistance
[Show more]
Seller
Follow
michaelrothstein
Content preview
UNISAInternational Financial Management
2022 FIN4802 Assignment 1
, 38965550 FIN4802 Assignment 1 Unique number: 815813
QUESTION 1
1.1 Interest rate party is not holding.
(1+ US interest rate) = 1.00625 AND (F/s) (1 + CAD interest rate) = (0.8388/0.8298) (1.01875) =
1.02980
Left and right sides of IRP are not equal, IRP is not holding.
1.2 Interest rate party is not holding, there is an arbitrage opportunity because 1.00625 < 1.02980.
Borrow: 1000000 at 1.25% per year. Pay back 1000000 x (1 + 0.0125) = 1012500
Convert: 1000000 to CAD at the spot rate = CAD1205100
Lend CAD 1205100 x interest rate = CAD 1250291.25 will receive back
Sell CAD 1250291.25 = CAD 1250291..1922 = $1048726.095
Profit = 1048726.095 - 1012500 = 36226.09461
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller michaelrothstein. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.27. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
85443 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now