covered interest arbitrage

HJ, an abitrager with Bank of Montreal, faces the following CAD/USD prices; Spot: CAD 1.49/USD 6M Forward: CAD 1.51/USD 6M CAD interest rate 7.5% per annum 6M USD interest rate 5.0% p.a. H.J is authorized to use CAD20,000,000 or its USD equivalent. The ending profit, if any, should be realized in CAD. How can he complete interest arbitrage? What will be his profit?

Nominal exchange rates, relative PPP , real exchange rate

One year ago Polish zloty was PLN 3.8000/USD. Since then the sloty has fallen 14% against the dollar. Price levels in the US have not changed, but Polish price has gone up 7% -what is the nominal exchange rate today? -what should be the exchange rate today, based on relative PPP and assuming last year was normal? -Did the zloty depreciate or appreciate in real terms, relative to the dollar, by what percentage? -using last year as the base, what is the real exchange rate of zloty against today?

spot-forward exchange rates

A FX dealer in London normally quotes spot, 1M, 3M and 6M forward. When you ask over the phone for current quotes for YEN/USD you hear "111.43 to 51, 52 to 48, 150 to 144, 337 to 205" a)what would you receive in USD if you sold YEN 300,000,000 spot? b)what would it cost you to purchase YEN 400,000,000 forward 3M with USD? When would you make payment for the forward transaction? c) in New York, 6M T-bill yields 6% per annum. Using mid rates, calculate the yield on Japanese 6M bills d)Verify your answer to part c with a hypothetical investment of $1,000,000 for 6M in both countries. Use mid rates for simplicity and ignore charges and taxes

Interest on Eurodollar loan

A US company CTM borrows $1,500,000 at LIBOR + 125bp p.a. on a 6M rollover basis from a London bank. If 6M LIBOR is 4 1/2% over the 1st 6M interval and 5 3/8% over the 2nd 6M interval, how much will CTM pay in interest over the 1st year of its Eurodollar loan?

forex market

A 3 * 9 FRA has an agreement rate of 4.75%. You believe 6M libor in 3M will be 5.125%. You decide to take a speculative position in a FRA with a $1,000,000 notional value. There are 183 days in the FRA period. Determine whether you should buy or sell the FRA and what your expected profit will be if your forecast is correct about the 6M Libor rate.