International Financial Management: Collect foreign exchange spot and forward rate data and interest rate data for two currencies; examine whether CIRP holds

Content:Content: 22Introduction3Collected data4Analysis4The case from scratch:6Discussion7Conclusion9References10IntroductionThe theory of Purchasing cater Parity (PPP) is non appropriate to foreign exchange consec straddle determination. One of the problems of using PPP is that it is primarilly focuses on differences of goods and service prices and it does not pay attention on international capital flows. aft(prenominal) World War II, the foreign exchange market has revolve quickly and it has enabled many foreign exchange transactions among countries, end-to-end the world and in any amount. This fact essentially supports the speculations approximately converting money from one currency to another dependent on the expected rate of return.

The theory of covered interest rate parity was modeled to understand the relation between the federal agency exchange rate, the forward exchange rate and the interest pass judgment in the two countries in a time period.

I have conceived this stress to research how the czech investor (a funds of 100.000.000CZK owner) screwing reach and exploit the arbitrage opportunity in the Euroland. It was actually problematic to find out development about above mentioned rates in the Czech Republic. There is no information about forward exchange rates.



When I tried to rival banks they told me they couldn´t help me (the ?sob bank operator, 30/10/07) or the other one said I knew much about it than she did (the ?s bank operator, 30/10/07). Ultimately, I contacted the group ´patria online´, the membership has to be prepaid to get the information about foreign exchange market. I have dealt with them and got the openhanded limited membership to find out the data for the essay - the information used in this work are put up on Patricia online webpages. The Czech Crown is not common, large and ofttimes traded currency, I have used in this work the mediate quotation.

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