SKR-b54, roll no 27--fm-_13_FM-II_Week2_s11-12_Conceptual Assignment

1. You have an import payment in CHF. You are maintaining USD account with ABC Bank. Inter Bank spot rate for USD/C
bank for your import transaction in CHF.

ASK(USD/CHF)=1/BID(USD/CHF)

2. Your export payment in USD has come to the bank. You want to convert this USD into INR. Spot rate USD/INR =66.56
Bank may load profit margin of 5 paise

domestic currency = INR; forgien Currency=USD; So bank will buy USD at BID Rate of= BID (INR/USD)-PROFIR MARGIN

3. You have an export receivable in GBP after 3 months from today. You want to book 3 months forward for this export re
Rate 3 months GBP/USD for your export receivables.. Spot : GBP/USD 1.4190/95 ; 3 Months forward discount/premium: 61

SPOT RATE= 1.4190-1.4195

3 mnths discount points/swap points=0.0061-0.0060

3 months forward rate= (1.4190-0.0061)-(1.4195-0.0060)=1.4129-1.4135

4. Spot rate of EUR/USD: 1.1304 and GBP/USD 1.3190 is quoted in New York. What would be the price of GBP/EUR in Ne

spot RATE (USD/EUR)=1.304; SPOT RATE GBP/USD= 1.3190

GBP/EUR=(GBP/USD)*(1/(USD/EUR))=1.011503 ~ 1.0115

5. One of the Indian trading companies is importing equipment from Germany by paying in EURO. Value of imported equip
in the local market and invoiced in INR. Ignore companys profit margin. Find out EUR/INR cross rate for the import payme
arrive at the rate quoted by the bank to the importer..

Market rates are as follows: Spot rate EUR/USD: 1.1305/10 ; USD/INR: 67.56/57 ;Bank will load a profit margin of 0.150% o

BID EUR/INR=BID(EUR/USD)*BID(USD/INR)

ASK EUR/INR=ASK(EUR/USD)*ASK(USD/INR)
EXCHANGE RATE EUR/INR =76.37658/76.42167

IMPORTED EQP. COST IN EUR

ONE EURO BUYING COST=ASK PRICE+ADDING PROFIT MARGIN

TOTAL COST FOR INR

6. A Japanese investor has invested in Australia. His investments in Australia are in AUD. The Japanese investor wants to ta
JPY.

Present market rates:

USD/JPY: 102.10

AUD/USD: 0.7500

The investor wants your expert guidelines whether to hedge or not to hedge on the basis of following currency trend

a. USD against JPY is expected to appreciate in the coming 6 months

b. AUD is expected to depreciate against USD in the coming 6 months

You have the choice of booking forward contract either for both the positions (USD/JPY and AUD/USD) or keep

The investments are in Australian Dollars AUD. In order to take investments back in JPY, the investo

if AUD depreciates that means USD appreciates and he will get less USD; however If USD appreciat

let's assume USD appreciation is same for both say 1 %

So AUD/JPY=AUD/USD*(USD/JPY)
so comparison shows that the impact of USD appreciation more against JPY than AUD will bring less
against JPY than AUD; then it brings more JPY. Equal appreciation brings no change

we are not having information on the trends of appreciation. so the investor needs to study the A
for AUD/USD as the latte
1.1554

66.51

1.0115030675

76.37658

76.42167
 100000
76.53630

7653630.25

102.10

0.7500

positions open

nd then USD to JPY

reciates and he will get more Japanese Yen.

equal 1% 1% apprction in USD against

0% appreciation appreciation in USD JPY; 2% apprctn USD against
against JPY &AUD AUD

76.5750 76.5750 75.8243

. However it is advisable to keep USD/JPY position open and forward contract

ss JPY
 1% apprction in 0% apprction in
2% apprction in USD against JPY; 1% USD against JPY; USD against JPY;
apprctn USD against AUD 0% apprctn USD 1% apprctn USD
against AUD against AUD

77.3332 77.3408 75.8168