can anyone explain yield to domestic investor in relation to yield to foreign investments and change in exchange rates????what circumstance you reccommend in investing in money market securties?

answer

watching

views

For unlimited access to Homework Help, a Homework+ subscription is required.

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

Nelly StrackeLv2

28 Sep 2019

Unlock all answers

Get 1 free homework help answer.

Already have an account? Log in

Related questions

1) For each problem, assume that there are only two countries in the world. The US is Home, and ROW (rest of the world, treated ass one country( is foreign. Assume floating exchange rates, and use norminal not reat interest rates. (show the equations you use and how you plug in variable values for partial credit.)

a) es=$1.30 i*=0.05 i=0.01

US firm BS, a speculator, insists that it can make a large return by investing in foreign bonds. what must BS's expectations be about the future value of the foreign currency? (provide a mathematical solution).

b) ef=$0.55 es=$0.60 i*=0.05 i=0.04

A novice US financial firm LB, which is risk-averse, believes that it can make a high return by investing in foreign bonds due to high interest rates there. What must you (the more experianced advisor) explain to LB?

(a) What is the no-arbitrage price for a 1-year UK Pound Sterling foreign-exchange forward denominated in US Dollars, if the current exchange rate is $1.65/Â£, the risk-free interest rate in the UK is 3% per year, and the risk-free interest rate in the US is 2% per year?

(b) Carefully outline the steps a US investor must undertake in order to invest $1000 in UK Gilts (risk-free bonds), assuming his current wealth is in US Dollars, and that he wants to consume his money in US Dollars afterwards. Assume he uses the foreign-exchange forward you priced in the previous part in converting his money back to Dollars at the end of his investment.

coffeearmadillo174

You are hired as a financial coordinator for a local car dealership that imports cars from your assigned country/currency (Swedish Kronas).
The dealership just imported cars worth $1,000,000 using the exchange rate as of the date you are completing this assignment.
What you owe to the foreign car manufacturer is in their own currency (i.e. your assigned unique currency).
You have the cars at your lot right now.
You need to pay the foreign manufacturer, in their own currency, within three (3) months.
Please be explicit in your answers and show all your work.

Please explain how you can lose money as foreign exchange rates change.

violetoyster507

Weekly leaderboard

Home

Homework Help 3,900,000

Finance 370,000