In April 2025
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rohani buys a washing machine by paying a RM 400 deposit and paying the balance RM 1772 after 5 months. If the interest is 10% compounded monthly, calculate the cash value of the washing machine.
Anita saves twice as much in the previous month in a bank. Six months later she had Rs 1575 in her bank. If so, how much did she pay in the sixth month?
export by his company. Felix is concerned about his exposure because he
believes that there are two possible scenarios: (1) the pound will depreciate by 3%
over the next month or (2) the pound will appreciate by 2% over the next month.
There is a 70% chance that Scenario 1 will occur. There is a 30% chance
that Scenario 2 will occur.
Felix notices the spot rate of the pound is GHS 8.1 and the one month
forward rate is GHS 8.6. Felix can purchase a put option over the counter
from a securities firm that has an strike price of GHS 8.6, a premium of
GHS0.025, and an expiration date of one month from now. Determine the amount of
cedis received by the apple Company under each of the two exchange rate
scenarios if:
a) The receivables to be received in one month are not hedged.
b) A put option is used to hedge the receivables in one month.
c) A forward hedge is used to hedge the receivables in one month.
Agye will receive 20,000 British pounds one month from now as payment for apple juice, exports by his company. Agye is concerned about his exposure because he
believes that there are two possible scenarios: (1) the pound will depreciate by 3%
over the next month or (2) the pound will appreciate by 2% over the next month.
There is a 70% chance that Scenario 1 will occur. There is a 30% chance
that Scenario 2 will occur.
Agye notices the spot rate of the pound is GHS 8.1 and the one month
forward rate is GHS 8.6. Agye can purchase a put option over the counter
from a securities firm that has an exercise (strike) price of GHS 8.6, a premium of
GHS0.025, and an expiration date of one month from now. Determine the amount of
cedis received by the apple Company under each of the two exchange rate
scenarios if:
a) The receivables to be received in one month are not hedged.
b) A put option is used to hedge the receivables in one month.
c) A forward hedge is used to hedge the receivables in one month.
You are planning for long term investment in a stock. After specific analysis you have two options i.e., Stocks of Company A and Stocks of Company B. You have following data on the stock prices of both companies;
Time Line
Share A
Share B
2010
15
125
2020
41
320
Please select the share that is more likely give you better return in the long run. Also, show your selection process.
You had a chat with the relationship manager of your bank, and they are willing to lend $50 million to you for 1 year at an interest rate of 7.5% which appears to be far better than the current 1-year cedi lending rate of 18.01% on the domestic market. Your intention is to borrow in USD and convert this to Ghana Cedis and use for your expansion program. The current exchange rate is 5.20 per USD and is forecasted to be 5.75per USD in a year’s time.
a) Calculate the effective annual Financing Cost of the USD Loan and advise Yogobozz whether it is prudent to borrow USD at this stage.
b) Assume that Interest rate Parity (IRP) holds and that you intend to hedge the exchange rate risk by entering into a 1 year Forward transaction with your Bank. What will be the effective annual interest rate in this case?
Cal Bank believes the Ghanaian Cedi will appreciate over the next five days from GHS 4.48 to GHS 4.50. Cal Bank has the capacity to borrow either GHS 10 million or $5 million. If Cal Bank's forecast is correct, what will its dollar profit be from speculation over the five-day period (assuming it does not use any of its existing consumer deposits to capitalize on its expectations)? The
following annual interest rates apply
Currency. Lending Rate Borrowing Rate Dollars 7.10% 7.50%
Ghana Cedis. 6.80% 7.25%
Assume the following information:
90-day Ghana interest rate = 4%
90-day South African interest rate = 3%
90-day forward rate of South African rand = GHS 0.3500
Spot rate of South African rand = GHS 0.3550
Assume that the Osei Bonsu Co. in Ghana will need 300,000 rand in 90 days to pay for
imports from South Africa. It wishes to hedge this payables position. Would it be better
off using a forward hedge or a money market hedge? Substantiate your answer with
estimated costs for each type of hedge.
a) The value of the US Dollar today is GHS 6.1. Yesterday, the value of the US dollar was
GHS 5.91. The Ghana Cedi ____ by ____%.
b) Assuming that existing U.S. one year interest rate is 8% and the Canadian one-year
interest rate is 9%. Also assume that interest rate parity exists. Should the forward rate
of the Canadian dollar exhibit a discount or a premium? If U.S. investors attempt
covered interest arbitrage, what will be their return? If Canadian investors attempt
covered interest arbitrage what will be their return?
