Essays on Foreign Exchange and Money Markets - Theory, Practice, and Risk Management Assignment

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The paper “ Foreign Exchange and Money Markets - Theory, Practice, and Risk Management” is a fascinating variant of the assignment on finance & accounting. Calculations for the above calculations are as follows; Purchase price, converted to Jordanian dinar (JD) = € 375,000 * 0.8700 (JD/€ ) = 326,250.00 JDAdditional fees due to importation= 326,250.00 * 0.12 = 39,150.00Total cost, Jordanian dinar (JD) = 326,250 +39,150.00 = 365,400.00Resale fee in Jordanian= 365,400.00 * 0.22= 80,388.00Resale price to Saudi Arabian, in JD = 365,400.00 + 80,388.00 = 445,788.00Price paid in Iraq dinar, converting JD to SRI = 445,788.00 * 5.2966 = 2,361,165.25The US dollar equivalent of the price paid = 2,361,165.25/0.7080 = $629,644.07Question 2A person pays a$240,000 for a new four-bedroom 2400-square-foot home.

He plans to make a 20% down payment, but is having trouble deciding whether he wants a 15-year-fixed-rate mortgage (6.400%) or a 30-year fixed rate (6.875%). What is the monthly payment, assuming a fully amortizing loan of equal payments for the life of the mortgage? The principal= $240,000 *0.80 = $192,000The monthly payment is calculated using the following formula; Monthly payment = (mortgage amount* r/12)/1-(1/ (1+r/12) ^T*12Where; The mortgage amount= $192,000The monthly mortgage financing rate=0.0 6875/12The mortgage term in years = 30 yearsMortgage term in months = 12*30 = 360Using the PMT in the excel spreadsheet, the monthly payment = $1261.30 or-$1261.30 = PMT (0.06875/12, 360, 192000, 0, 0).

It should be noted that the monthly payments for fixed rate mortgages are very sensitive to the interest rates and the number of years in the loan. Thus, a mortgage of $192000 would require a monthly payment of $1261.30.Assume that instead of making a 20% down payment, he makes a 10% down payment, and finances the remainder at 7.125% fixed interest for 15 years.

What is his monthly payment? The principal amount would be calculated as follows; Principal = $240,000*0.90 = $216000, monthly mortgage financing rate= 0.07125/12, mortgage term in years = 12 years, mortgage term in months = 12*15 = 180. Using the amortizing formula above or the PMT in an excel sheet, the following monthly payment is obtained; -$1956.60= PMT (0.0059375, 180, 216000, 0, 0)Thus the monthly payment will be $1956.60.


Steiner, B., & Securities Institute. (2002). Foreign exchange and money markets: Theory, practice and risk management. Oxford: Butterworth-Heinemann.
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