Question 1 (25 marks)
In 2011, HSBC Holdings plc (HSBC) cited unfavourable market conditions when shelving plans to list on a proposed Shanghai international board, a move which never came to fruition. However, under the recent Shanghai-London stock connect, firms listed in Shanghai will be able to sell Global Depositary Receipts (GDRs) to investors in London, and those listed in London will be able to issue CDRs to investors in Shanghai. HSBC is set to be the first company to issue CDRs.
Reuters 2018, HSBC poised to be first firm to issue Chinese Depositary Receipts: Available from: https://www.reuters.com/article/us-hsbc-listing-shanghai/hsbc-poised-to-be-first-firm-to-issue-chinese-depositary-receipts-sources-idUSKCN1MS1KM. Accessed 2 July 2020
You are provided with additional information:
31 March 2020 – HKD/GBP spot rate (mid) 0.10440
1 April 2020 – HKD/GBP spot rate Bid 0.10400 and offer 0.10450
GBP borrowing rate = GBP LIBOR (overnight) + 0.3 basis points
|GBP LIBOR (Overnight)|
|June 01 2020||0.05363 %|
|May 01 2020||0.05175 %|
|April 01 2020||0.06338 %|
|March 02 2020||0.68413 %|
|February 03 2020||0.68263 %|
|January 02 2020||0.66613 %|
What is the arbitrage gain / loss and at what range of spot exchange rates would make the trade profitable / non-profitable?
Word count requirement: 250. Minimum number of references: 2.
Word count requirement: 150
You deposited GBP 2,500 into your recently-opened futures trading account. At that time, the spot rate for British pound against the US dollar spot was USD1.2500. This rate locked the beginning account balance in US dollars. The account has a trading leverage of 100:1, which defines the initial margin requirement. The variation margin was set at 40% of the initial margin.
You conducted futures trades (in standard contract size **) on the British pound against the US dollar. The online broker takes a 5-pip spread on either side of the mid-rate. The table below lists your trades, all executed at settlement prices: You complied with margin calls, if any.
|Day||US dollars per GBP
(Settlement price – mid-rates)
|1||1.2400||Shorted 4 contracts|
|4||1.2460||Squared all contracts|
Calculate your daily trading profit / loss, margin call sums if any, the net profit / loss in monetary and in percentage terms at the end of Day 4.
Summarize your findings in a table, accompanied by working and explanation.( why do I loss or make money, when do you get artribute margin call why do you get margin call
Word count requirement: 200. 2 reference
can use this table to do the summary but must have explain.
Each question do the table more clear to see the stept.
Detail explanation why you take this number, how come the number. explain the step, how come the result, explain the result, and step by step more clear
2 pages – Harvard format.