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NMIMS
MBA APRIL 2019 SOLVED ASSIGNMENTS
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READYMADE SOLVED MBA APRIL 2019 ASSIGNMENTS
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NMIMS MBA SOLVED APRIL 2019 ASSIGNMENTS
1. You are given the
following interest rates.
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Rs.
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$
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||
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3- months
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15%
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6%
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6-month
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14.5%
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5.5%
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9-month
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14%
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5.0%
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The 3-month forward rate
is Rs. 36/$. Calculate the 3-month forward rate 6-months from now. (10 Marks)
2. ABC Ltd. is planning to
import a multi-purpose machine from Japan at a cost of 3400 lakhs yen. The
company can avail loan at 18% interest per annum compounded quarterly with which
it can import the machine. However there is an offer from Tokyo branch of an
India based bank extending credit of 180 days at 2% per annum against opening
of an irrevocable letter of credit. Other information:-
Present exchange rate Rs.
100 = 340 yen
180 days forward rate Rs.
100 = 345 yen
Commission charges for
letter of credit at 2% per 12 months.
Advise whether the offer
from the foreign branch should be accepted?
(10 Marks)
3 A) Suppose the spot rate
is $ 0.20/FF. The US one-year rate is 6%. The forward rate is $
0.1923/FF.
What is the current
one-year French interest rate that will satisfy the Interest Rate Parity?
Suppose the one-year French interest rate is 12% instead. What kind of
arbitrage would you perform to take advantage of this opportunity?
(5 Marks)
3 B) Assume that the
Citibank trading room is dealing on the following quotations Spot
Sterling = $1.5000,
Euro-Sterling interest rate (6-months) = 11.00% p.a. Euro-$ interest rate
(6-months) = 6.00% p.a. and that Barclays Bank is quoting Forward Sterling
(6-months) at $1.4550.
Describe the transactions you would
make to earn risk-free covered interest arbitrage profits? How much profit
would you expect to make?
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