题目内容

When short-term interest rates become lower in Tokyo than in New York, interest arbitrage operations will most likely result in a(n):

A. Increase in the spot price of the yen
B. Increase in the forward price of the dollar
C. Sale of dollars in the forward market
D. Purchase of yen in the spot market

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A "call" option gives General Motors the right to sell pounds at a specified price, while a put option gives General Motors the right to buy pounds at a specified price.

A foreign currency option is an agreement between a holder (corporation) and a writer (commercial bank) giving the holder the right to buy or sell a certain amount of foreign currency at any time through some specified date.

An option whose exercise price is equal to the spot rate is said to be .

A. in-the-money
B. at-the-money
C. out-of-the-money
D. on-the-spot

Assume the following: (1) the interest rate on 6-month treasury bills is 8% per annum in the United Kingdom and 4% per annum in the United States; (2) today's spot price of the pound is $1.50, while the 6-month forward price of the pound is $1.485.By investing in U.K. treasury bills rather than U.S. treasury bills, and not covering exchange rate risk, U.S. investors earn an extra return of .

A. 4% per year, 1% for the 6 months
B. 4% per year, 2% for the 6 months
C. 2% per year, 0.5% for the 6 months
D. 2% per year, 1% for the 6 months