JJ Fashion Wholesalers Ltd, an Indian clothing manufacturer, has a contract to purchase cotton from an Australian supplier to the value of AUD $700,000. How much will this order cost in Indian rupees (INR) if the bank has quoted JJ Fashion an AUD/INR exchange rate of 54.07 – 54.98? (b) Would JJ Fashion Wholesalers Ltd prefer the AUD/INR exchange rate to be higher or lower? Why?
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(a) JJ Fashion Wholesalers Ltd, an Indian clothing manufacturer, has a contract to purchase cotton from an Australian supplier to the value of AUD $700,000. How much will this order cost in Indian rupees (INR) if the bank has quoted JJ Fashion an AUD/INR exchange rate of 54.07 – 54.98?
(b) Would JJ Fashion Wholesalers Ltd prefer the AUD/INR exchange rate to be higher or lower? Why?
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- JJ Fashion Wholesalers Ltd, an Indian clothing manufacturer, has a contract to purchase cotton from an Australian supplier to the value of AUD $700,000. How much will this order cost in Indian rupees (INR) if the bank has quoted JJ Fashion an AUD/INR exchange rate of 54.07 – 54.98 Would JJ Fashion Wholesalers Ltd prefer the AUD/INR exchange rate to be higher or lower? Why?JJ Fashion Wholesalers Ltd, an Indian clothing manufacturer, has a contract to purchase cotton from an Australian supplier to the value of AUD $700,000. The bank has quoted JJ Fashion an AUD/INR exchange rate of 54.07 – 54.98? Would JJ Fashion Wholesalers Ltd prefer the AUD/INR exchange rate to be higher or lower? Why?JJ Fashion Wholesalers Ltd, an Indian clothing manufacturer, has a contract to purchase cotton from an Australian supplier to the value of AUD $700,000. How much will this order cost in Indian rupees (INR) if the bank has quoted JJ Fashion an AUD/INR exchange rate of 54.07 – 54.98?
- (a) Suppose you are a Bangladesh Citizen who is planning to go to USA. Current Exchange Rate is Tk BDT/$ 85/86 and according to your estimation you need 3.5lacs taka for your trip. i. How much BDT do you need to cover your cost of trip? ii. What is the American Quote in this case? (b) The following exchange rates are given AUD/USD 1.1197/1.2135 & AUD/GBP 2.1920/2.2500. What is the European quote for Pounds?Suppose an American investor is given the current exchange rates in the following table. The listed quotations are American terms. British pound (E) Euro (C) Australian dollar (AU$) Given these rates, an Australian dollar can purchase $8.95 Exchange Rate $1.9760 / pound $1.5110/euro O $6.92 O $6.51 $0.9240/ Australian dollar $8.14 British pounds. indirect Magic Milling Company is a U.S.-based firm that produces stereos in Germany at a cost of € 128 (including production and transportation costs) and sells them in England for £ 102. Based on the exchange rate table given in the preceding question, what is Magic Milling Company's dollar profit for each unit sold? direct quotations stated inA product sells for $1,000 in the U.S. If the exchange rate between $ and euro is $1 = 0.90 euro, and if ppp holds, what would be the price of the same product in europe?
- Suppose the following exchange rate quotations are available: Citibank quotes U.S. dollars per Euro: $1.2223/€Barclays Bank quotes U.S. dollars per pound sterling: $1.8410/£ Dresdner Bank quotes Euros per pound sterling: €1.5100/£ You are a market trader with $1,000,000. Will you be able to make an arbitrage profit using these quotes? If yes, why? What will be the profit? Show your calculations.2) Using the following cost and revenue information shown for Walmart, determine how the costs, revenue, and cash flow would be affected by three possible exchange rate scenarios for the New Zealand dollar (NZ$): (1) NZ$ = $.50, (2) NZ$ = $.55, and (3) NZ$ = $.60. (Assume U.S. sales will be unaffected by the exchange rate.) Assume that NZ$ earnings will be remitted to the U.S. parent at the end of the period. Ignore possible tax effects. Forecasted Net Cash Flows: Walmart. (in millions of U.S. dollars and New Zealand dollars) Sales Cost of Materials Operating Expenses Interest Expense Cash Flow U.S. Business $800 500 300 100 -$100 New Zealand Business NZ$800 100 0 0 NZ$700Suppose that Cloudastries Bank is a U.S.-based financial intermediary that serves the foreign exchange market. Assume that this bank is willing to both purchase and sell currency for the same rate. In other words, assume there is no bid/ask spread. Suppose Cloudastries has made the following direct quotations: Currency Dollar Spot Rate $0.55 $1.65 Mexican Peso Euro Additionally, Cloudastries has quoted a cross exchange rate of 1 euro = 3.01 pesos. After exchanging euros for pesos, the last step in triangular arbitrage is to exchange those pesos for dollars. If you exchange your 36,484.84 for dollars from Cloudastries, you would receive This represents a profit of
- Suppose that Cloudastries Bank is a U.S.-based financial intermediary that serves the foreign exchange market. Assume that this bank is willing to both purchase and sell currency for the same rate. In other words, assume there is no bid/ask spread. Suppose Cloudastries has made the following direct quotations: Currency Mexican Peso Euro Dollar Spot Rate $0.40 $1.60 Additionally, Cloudastries has quoted a cross exchange rate of 1 euro = 4.01 pes After exchanging dollars for euros, the next step in triangular arbitrage is to excl If you use all 6,250.00 to purchase pesos from Cloudastries, you would receive 40,106.42 64,160.00 100,250.00 25,062.50 ros for pesos. pesos.Travelex Australia provides the following three exchange rates. You assume that there is a triangular arbitrage profit opportunity exists based on the following three quotations. Calculate the arbitrage profit if you have A$1.18 million or MYR2.79 million or CNY3.13 million Value of a Chinese yuan (CNY) in Australian dollarsBid rate (Sell)0.2046Ask rate (Buy)0.2243 Value of a Malaysian ringgit (MYR) in Australian dollarsBid rate (Sell)0.3044Ask rate (Buy)0.3281 Value of a Malaysian ringgit (MYR) in Chinese yuan (CNY)Bid rate (Sell)1.7799Ask rate (Buy)1.9834Suppose Dassie Bank quoted the exchange rate of Singapore dollar in US$ at $0.60, the pound rate in US$ at $1.50, and the pound rate in Singapore dollars at S$2.6. For a US resident having $1,000 to do triangular arbitrage, she/he will end up withAnswerUS dollars after the arbitrage.