代做125.320 International Finance SAMPLE TEST (Assessment 1)代写Java编程
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125.320 International Finance
Time Allowed: 45 minutes
Question 1 [Total: 3 marks]
Assume that the balance-of-payments accounts for a country are recorded correctly as the following:
Balance on the current account = $130 billion, Balance on the capital account and the financial account = −$86 billion, Statistical discrepancy = 0.
Under the country’s fixed exchange regime, what is the balance on the reserves account (BRA)?
Question 2 [Total: 4 marks]
Suppose the spot ask exchange rate, Sa($/£), is $1.90 = £1.00 and the spot bid exchange rate, Sb($/£), is $1.89 = £1.00. If you were to buy $10,000,000 worth of British pounds and then sell them five minutes later, how much of your $10,000,000 would be "eaten" by the bid-ask spread?
Question 3 [Total: 6 marks]
This question contains two parts
Suppose that the pound is pegged to gold at £20 per ounce and the US dollar is pegged to gold at $35 per ounce.
a) What is the exchange rate between the dollar and the pound implied in the price of gold in the denomination of each currency? (2 marks)
b) Suppose the current rate of $1.60 per pound. Assume that you have $350 available for investment, detail the steps of an arbitrate strategy for taking advantage of this situation. How much profit can you get in the denomination of the US dollar? (4 marks)
Question 4 [Total: 7 marks]
This question contains two parts
Suppose you are provided with the following quotations:
Dealer A: Swiss franc/ U.S. dollar = SFr1.5897/$
Dealer B: Australian dollar/U.S. dollar = A$1.8215/$
Dealer C: Australian dollar/Swiss franc = A$1.1440/SFr
a) Ignoring transaction costs, do you have an arbitrage opportunity based on these quotes?
Provide evidence to support your answer. (2 marks)
b) If there is an arbitrage opportunity, what steps should you take to make an arbitrage profit
if you have A$1,000,000 available for this purpose? How much profit can you make in the A$ denomination? (5 marks)