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  Suppose that the annual interest rate is 6 percent in the United States and 4 percent in Great Britain, and that the spot exchange rate is $2/£ and the forward exchange rate, with 6-month maturity, is $2.3/£. Assume that an arbitrager can borrow up to $10,000 or £5,000.   Step 4: Suppose you can borrow either $10,000 or £5,000. Please fill out the blanks below for both trading options and decide which option will make profit.  Option A:   1)      Borrow $10,000 today, your repayment in 6 months will be $ [l2] .   2)      Exchange into £5,000 today at the current spot rate.   3)      Invest £5,000 in UK for 6 months, and you will receive £ [l3] (principal plus interest) in 6 months.   4)      Sell forward £ (the future value of your pound investment, which is what you get from the above step) due in 6 months to yield $ [l4] .   5)      Your arbitrage profit is $ [l5] .     Option B:   1)      Borrow £5,000 today, your repayment in 6 months will be £ [l6] .   2)      Exchange into $10,000 today at the current spot rate.   3)      Invest $10,000 in US for 6 months, and you will receive $ [l7] (principal plus interest) in 6 months.   4)      Buy forward £ (the future value of your pound loan, which is what you get from the first step) due in 6 months. The cost will be $ [l8] .   5)      Your arbitrage profit is $ [l9] . You will choose option [l1] (Please insert A or B) based on the above calculations.  

  Questions are based on the following information: UA purchased an aircraft from Airbus and was billed €30 million payable in one year. UA is concerned with the USD costs from international sales and would like to control exchange risk. The current spot exchange rate is $1.05/€ and one-year forward exchange rate is $1.10/€ at the moment. UA can buy a one-year option on euro with a strike price of $1.12/€ for a premium of $0.02 per euro. Currently, the annual interest rate is 5% in the euro zone and 6% in the U.S.  

A British firm offers a French customer the choice of paying a £10,000 bill due in 90 days with either £10,000 or €12,500. The value of this free option is _______.

SHORT ANSWER :SA3: Answer in two-four sentences: Wang [last name] Chia-Hao emigrated to the United States to attend college in New Jersey and began calling himself Charles Wang and upon graduation, decided to accept a job offer at Google.  When Wang Chia-Hao retired, he liked to tell people he had lived in three different cultures: China, New Jersey, and Google. Use Wang’s experience to explain the difference between acculturation & assimilation. For an extra point, can you find a clue to his enculturation within the details of this scenario?

Students are required to read the exam guidelines and requirements and acknowledge they have read all examination guidelines and requirements before starting the exam.

Yo les sugiero que ustedes no … más de $100 por esa pintura.

Ellos  … el próximo mayo.

¿Qué harías tú? Yo, en tu lugar, les … a mis padres sobre mi decisión.

Cuando vivíamos en la ciudad, nosotros siempre … las noticias del periódico.

No creo que mañana nosotros …  tiempo.