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frosja888 [35]
2 years ago
6

Assume the bid rate of a New Zealand dollar is $.33 while the ask rate is $.335 at Bank X. Assume the bid rate of the New Zealan

d dollar is $.32 while the ask rate is $.325 at Bank Y. Given this information, what would be your gain if you use $1,000,000 and execute locational arbitrage? That is, how much will you end up with over and above the $1,000,000 you started with?
Business
1 answer:
romanna [79]2 years ago
7 0

Answer:

You will end up with $15,384.62 over and above the $1,000,000 you started with.

Explanation:

We purchase 1 NZ dollar from bank Y at $0.325 and sell it to Bank X at $0.33

NZ dollars that can be bought by = 1,000,000/0.325

                                                        = $3,076,923.08

Gain on $1,000,000 = 3,076,923.08*(0.33 - 0.325)

                                  = $15,384.62

Therefore, You will end up with $15,384.62 over and above the $1,000,000 you started with.

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3 years ago
A Treasury bill with 119 days to maturity is quoted at 97.630. What are the bank discount yield, the bond equivalent yield, and
Dovator [93]

Answer:

discount yield=7.17%

bond equivalent yield=7.34%

effective annual yield =7.64%

Explanation:

Discount yield =discount /face value*360/t

where t is the number of days to maturity

discount =face value -issue price

discount=100-97.63

discount=2.37

discount yield =2.37/100*360/119

discount yield=7.17%

bond equivalent yield=(1+periodic yield)^360/t-1

periodic yield =discount/face value=2.37/100=2.37%

bond equivalent yield =(1+2.37%)^(360/119)-1

bond equivalent yield=7.34%

effective annual yield=(1+HPY)^365/t-1

Holding period yield (HPY)=discount/price=2.37/97.63

HPY=2.43%

effective annual yield=(1+2.43%)^(365/119)-1

effective annual yield =7.64%

6 0
3 years ago
The difference between the nominal interest rate and the real interest rate is
leonid [27]

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Explanation: in financial maths when you speak about "real" rates you should consider the inflation impact.

8 0
3 years ago
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If the minority price for a single share of stock of a company is $20, if there are 500 thousand shares of stock, and a person o
KATRIN_1 [288]

Answer:

$4,500,000

Explanation:

current market price per stock $20

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corporation's total value = 500,000 x $20 = $10,000,000

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The controlling interest premium equals the difference between the current market price of the stock and the purchase offer.

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steposvetlana [31]

Answer: Option (A) is correct.

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