A focus on naturalistic inquiry, use of the researcher as an instrument in data collection, and reports that focus on narrative are common ingredients of what type of studies?

Suppose you observe the following exchange rates: S($/£) = 1.3. The one-year forward rate is F1($/£) = 1.32. The risk-free interest rate in the U.S. is 5% and in UK it is 2%. You can borrow either $1,300,000 or £1,000,000. Briefly and clearly explain your arbitrage strategy. Show your work in each step to receive partial credits. 

Suppose you observe the following exchange rates: S($/£) = 1.3. The one-year forward rate is F1($/£) = 1.32. The risk-free interest rate in the U.S. is 5% and in UK it is 2%. You can borrow either $1,300,000 or £1,000,000. Your total arbitrage profit will be $ (please leave whole dollars for your answer).

A U.S. firm holds an asset in UK and considers selling it in one year. The firm faces the following scenario of the future spot rates in one year:   State 1 State 2 State 3 State 4 State 5 Probability 20% 20% 20% 20% 20% Spot rate ($/£) 1.6 1.5 1.4 1.3 1.2 P*(£) 1200 1400 1600 1800 2000 P ($) $1920 $2100 $2240 $2340 $2400 In the above table, P* is the pound price (local price) of the asset in UK held by the U.S. firm and P is the dollar price of the asset. The variance of the dollar value of the hedged position is .

A U.S. firm holds an asset in UK and considers selling it in one year. The firm faces the following scenario of the future spot rates in one year:   State 1 State 2 State 3 State 4 State 5 Probability 20% 20% 20% 20% 20% Spot rate ($/£) 1.6 1.5 1.4 1.3 1.2 P*(£) 1200 1400 1600 1800 2000 P ($) $1920 $2100 $2240 $2340 $2400 In the above table, P* is the pound price (local price) of the asset in UK held by the U.S. firm and P is the dollar price of the asset. The variance of the dollar price of this asset if the U.S. firm remains unhedged against this exposure is .  

The current bid price is $1.5/€ and ask price is $1.6/€. If an individual investor wants to buy Euro using $1000. How much Euro he will get?

Transaction Exposure Problem: Suppose that you (i.e., company XYZ) are a US-based importer of goods from Canada. You expect the value of the Canada dollar to increase against the US dollar over the next 6 months. You will be making payment on a shipment of imported goods (CAD100,000) in 6 months and want to hedge your currency exposure. The US risk-free rate is 5% and the Canada risk-free rate is 4% per year. The current spot rate is $1.25/CAD, and the 6-month forward rate is $1.3/CAD. You can also buy a 6-month option on Canadian dollars at the strike price of $1.4 /CAD for a premium of $0.10/CAD. Suppose Canada company gave XYZ a choice of paying either CAD100,000 or $125,000 in six months. If the spot exchange rate in six months turns out to be $1.3/CAD, which currency (USD or CAD) do you think XYZ will choose to use for payment? The value of this free option for XYZ is $ .

Transaction Exposure Problem: Suppose that you (i.e., company XYZ) are a US-based importer of goods from Canada. You expect the value of the Canada dollar to increase against the US dollar over the next 6 months. You will be making payment on a shipment of imported goods (CAD100,000) in 6 months and want to hedge your currency exposure. The US risk-free rate is 5% and the Canada risk-free rate is 4% per year. The current spot rate is $1.25/CAD, and the 6-month forward rate is $1.3/CAD. You can also buy a 6-month option on Canadian dollars at the strike price of $1.4 /CAD for a premium of $0.10/CAD. If XYZ hedges the exposure using an option hedge, total option premium: $ will be paid today. The option premium will grow to $   in six months at the US interest rate. In six months, if the spot price is $1.3 per CAD, the option is (in/out) of the money. So, XYZ will buy 100,000 CAD at the price of $ per CAD, which equals to a total cost of $ . After the option premium, the total (net) dollar costs in six month is $ .

The current spot exchange rate is $1.06/CAD, and the 3-month forward rate is $1.20/ CAD. a) If you speculate that the future spot rate in 3 months will be $1.10/CAD. What kind of position (long/short) that you would like to enter in the forward market? Answer: You would like to enter a (long/short) position in the forward contract. b) What is your expected profit in USD? Suppose that you can buy or sell CAD 100,000. Answer: Your expected profit will be $ . c) At expiration, the spot price turns out to be $1.25/ CAD. Do you profit or do you lose at maturity date? What is the size of your profit/loss in USD? Answer: You (profit/lose). The size of your total profit/loss is $ . (please calculate your profit/loss in USD and use negative sign to indicate loss)

The AUD/$ spot exchange rate is AUD1.60/$ and the SF/$ is SF1.25/$. The AUD/SF cross exchange rate is: