What is the rate of appreciation of the japanese yen

Reference no: EM131230451

Question 1: The following table summarizes a country's current account in a given year.

	Millions of US dollars
Goods: exports	50,000
Goods: imports	60,000

Services: credit	20,000
Services: debit	17,000

Income: credit	6,000
Income: debit	10,000

Current transfers: credit	2,000
Current transfers: debit	3,000

What is the balance of trade of this country?

$-50,000

$-10,000

$10,000

$50,000

$75,000

Question 2: Based on the information given in the previous problem, what is the balance on goods and services of this country?

$-45,000

$-7,000

$13,000

$45,000

$63,000

Question 3: Based on the information given in the previous problem, what is the balance on current account of this country?

$-52,000

$-45,000

$-12,000

$-5,000

$25,000

Question 4: The following table summarizes a country's balance of payments. Answer the next 2 questions based on the information.

	Billions of US dollars
Current account balance	-200
Capital account balance	5
Financial account balance	150
Net errors and omissions	7
Reserves and related items	38

Is this country experiencing a net capital inflow or outflow? By how much?

outflow by $300

outflow by $215

outflow by $155

inflow by $215

inflow by $575

Question 5: Has this country's official reserve increased or decreased? By how much?

increase by $18

increase by $25

increase by $30

decrease by $38

decrease by $45

Question 6: Suppose the following information is available for a country in a given year.

	Billions of US dollars
S (Private Savings)	$1400
I (Private Domestic Investment)	$800
G (Government Spending)	$900
T (Tax Revenues)	$600

How much is the budget deficit of the country?

$-400billion

$-200billion

$200billion

$300 billion

$500billion

Question 7: How much is the current account balance of the country?

$-400billion

$-200billion

$200billion

$300 billion

$500billion

Question 8: What is the percentage of the domestic savings that were used to support the net exports?

20%

25%

40%

45%

50%

Question 9: The following information holds for the next three problems:

The $/£ bid and ask prices are $1.72 and $1.74, respectively.

What is the corresponding £/$ bid price?

0.5713

0.5747

0.5792

0.5867

0.5882

Question 10: If you want to change $1,000 into pound, how much would you get?

£571.33

£574.71

£579.23

£586.67

£588.24

Question 11: If you want to sell £1,000, how much dollars would you get?

$1,500

$1,700

$1,720

$1,740

$1,780

Question 12: The SF/$ spot exchange rate is 1.20 and the AUD/$ is 1.1. What is the SF/AUD cross exchange rate?

0.8

1.09

1.21

1.33

1.45

Question 13: Suppose the foreign exchange rate between the dollar and Swiss franc is shown as follows:

S($/SF) = .6012

F30($/SF) = .5997

The spot rate in 30 days turns out to be .5993. What is the profit (loss) from a short position in a forward contract to sell SF1,000,000?

$1,600 loss

$2,200 loss

$400 profit

$1,000 profit

Question 14: Assume the following prices for the next two questions:

	American Terms ($/£) ($/€)		European Terms(£/$) (€/$)
	Bid	Ask	Bid	Ask
British Pound (£)	1.4578	1.4633	0.6834	0.6860
Euro (€)	1.0812	1.0834	0.9230	0.9249

If a customer wants to sell £1,000,000 for €, how much € will he get?

€1,052,776

€1,133,677

€1,243,633

€1,345,579

Question 15: If a customer wants to sell €1,000,000 for £, how much £ will he get?

£738,892

£748,333

£777,633

£852,347

Question 16: Assume the following prices for the next four questions:

The SF/$ spot exchange rate is 1.70, and the CD/$ spot rate is 1.2 and the SF/CD 1.25. Suppose you have $1,000,000. To engage in the triangular arbitrage, you follow the next steps.

How much SF can you buy with the $1,000,000?

SF1,200,000

SF 1,500,000

SF 1,700,000

SF 2,000,000

Question 17: How much CD can you buy with the SF from the above transaction?

CD916,031

CD1,145,038

CD1,297,710

CD 1,360,000

Question 18: How much $ can you buy with the CD from the previous transaction?

$1,073,157

$1,081,425

$1,099,237

$1,133,333

Question 19: How much profit can you make from these transactions?

$73,157

$81,425

$99,237

$133,333

Question 20: The following information holds for the next four problems:

	Yen (¥/$)			Pound ($/£)
	Mid	bid	ask	mid	bid	ask
Spot	114.25	114.2	114.3	1.6525	1.6523	1.6527
forward-1m	114.02	-24	-22	1.6500	-26	-24
forward-6m	112.10	-220	-210	1.6368	-160	-154
swap-2yr	102.03	-1232	-1212	1.6291	-238	-230
swap-3yr	99.88	-1452	-1422	1.6266	-265	-253

The current spot rate of dollars per pound as quoted in a newspaper is ________ or ________.

£1.6525/$; $0.6051/£

$1.6525£; £0.6125/$

$1.6525/£; £0.6051/$

£1.6523/$; $0.6125/£

Question 21: The six-month forward bid price for dollars as denominated in Japanese yen is ________.

¥220/$

¥112.0/$

¥113.21/$

¥113.52/$

Question 22: The ask price for the three-year swap for a British pound is ___________.

$1.6274/£

$1.6292/£

$1.6315/£

$253/£

Question 23: According to the information provided in the table, the 1-month yen is selling at a forward ________ of approximately ________ per annum. (Use the mid rates to make your calculations.)

premium; 1.05%

premium; 2.42%

discount; 2.33%

discount; 3.25%

Question 24: The spot Singapore dollar is quoted bid S$1.6100/US$ and ask S$1.6150/US$. What is the direct quote in the United States to the nearest 4 decimal points?

US$0.6185/S$ bid, US$0.6192/S$ ask

S$1.6100/US$ bid, S$1.6150/US$ ask

US$0.6192/S$ bid, US$0.6211/S$ ask

S$1.6150/US$ bid, S$1.6165/US$ ask

Question 25: The following information holds for the next two problems:

The SF/$ spot exchange rate is 1.25 and the 180 forward exchange rate is 1.15.

What is the forward premium (discount) of the dollar against SF for delivery in 180 days?

11.0% premium

14.75% premium

11.0% discount

16.0% discount

18.0% discount

Question 26: Continuation of the previous problem:

The SF/$ spot exchange rate is 1.25 and the 180 forward exchange rate is 1.15.

What is the forward premium (discount) of SF against the dollar SF delivery in 180 days?

12.35% premium

16.25% premium

17.39% premium

12.35% discount

16.25% discount

Question 27: If according to the law of one price the current exchange rate of dollars per British pound is $1.43/£, then at an exchange rate of $1.5/£, the pound is over/under-valued by _________%.

undervalued by 2.3%

undervalued by 4.9%

overvalued by 2.3%

overvalued by 4.9%

overvalued by 6.33%

Question 28: One year ago the spot rate of U.S. dollars for Canadian dollars was $1.2/C$. Since that time the rate of inflation in the U.S. has been 4% lower than that in Canada. Based on the theory of Relative PPP, the current spot exchange rate of U.S. dollars for Canadian dollars should be approximately ____.

$0.95/C$

$1.05/C$

$1.15/C$

$1.20/C$

$1.25/C$

Question 29: The following information holds for the next three problems:

Sony of Japan produces LCD monitors and exports them to the United States. Last year the exchange rate was 120¥/$ and Sony charged $150 per LCD monitor. Currently the spot exchange rate is 110¥/$ and Sony is charging $160 per LCD monitor.

What is the rate of appreciation of the Japanese yen when the exchange rate changed from 120¥/$ to 110¥/$.

9.09%

10.52%

15.2%

17.25%

19.35%

Question 30: What is the implied exchange rate that was applied when Sony is charging $160 per LCD monitor? Assume the yen cost of a LCD monitor stays the same.

¥100/$

¥105/$

¥112.5/$

¥115/$

¥120/$

Question 31: What is the degree of pass through by Sony of Japan on their LCD monitors?

23.33%

25%

42.15%

52.5%

73.33%

Question 32: The following information holds for the next three problems:

Suppose that the annual interest rate is 5% in the US and 3% in Germany, and that the spot exchange rate is $1.2/euro and the forward exchange rate, with one-year maturity, is $1.25/euro. Assume that an arbitrager can borrow up to $2,000,000 and taking a covered interest arbitrage position.

If the arbitrager borrows $2,000,000, converts in into euro and invest in the German market, how much euro will she have at the end of the year?

1,526,667

1,633,333

1,666,667

1,716,667

1,945,667

Question 33: How much is the net profit in dollar in one year based on the covered interest arbitrage?

$45,833

$131,667

$145,333

$167,667

$233,333

Question 34: If an equilibrium with no arbitrage opportunities is to be restored, what should be the US interest rate? (Assume all the other numbers remain the same.)

6.35%

7.29%

8.33%

9.25%

10.33%

Question 35: If the annual interest rate is 4% in the US and 2% in Germany, then $ is expected to ____ against euro by ______%.

appreciate, 2%

appreciate, 3%

appreciate, 4%

depreciate, 2%

depreciate, 3%

Question 36: The following information holds for the next two problems:

Suppose that a Big Mac costs $3.00 in the US and 300 yen in Japan today. If the actual exchange rate is yen110/$ in the market.

How much is the Big Mac PPP exchange rate?

¥100/$

¥105/$

¥112.5/$

¥115/$

¥120/$

Question 37: According to the Big Mac prices, the Japanese yen is over/under valued compared to US $ by ____%.

undervalued by 6.33%

undervalued by 9.09%

overvalued by 2.56%

overvalued by 4.76%

overvalued by 8.56%

Question 38: Suppose the inflation is expected to be 2% in the US and 1% in the UK in the next year. Then, US dollar is expected to _________________ against British pound.

depreciate by 2%

depreciate by 3%

appreciate by 1%

appreciate by 2%

appreciate by 3%

Question 39: Suppose the inflation is expected to be 12% in Brazil and 2% in the US in the next year. Suppose today's exchange rate between the Brazilian real and US dollar is R3/$. What would you forecast the exchange rate to be one year from today?

R2.36/$

R2.67/$

R3.30/$

R3.63/$

R4.33/$

Question 40: The following information holds for the next two problems:

Suppose that on January 1 a firm in Mexico borrows $20 million from Citibank (USA) for one year at 6.00% interest per annum (bullet repayment of principal). During the year U.S. inflation is 2.00% and Mexican inflation is 12.00%. The loan was taken when the spot rate was Peso 3.40/US$. At the end of the one year loan period the exchange rate was Peso 4.80/US$

How much does the firm have to pay back in the Mexican peso one year later?

77.34million

83.52million

93.05million

101.76million

105.57million

Question 41: What is the cost to the firm of the loan in Mexican peso's (percent)?

23.33%

30.94%

34.57%

42.33%

49.65%

Question 42: Howard borrows ¥5,000,000 for 6 months at an annual rate of .50% and uses the proceeds to invest in the U.S. money market at an annual rate of 5.00%. If the spot rate today is ¥115/$ and the spot rate in 6 months is ¥110/$ Howard's net profit will be ____.

¥-110,326

¥-95,469

¥-67,333

¥23,333

¥67,333

Attachment:- Assignment.rar

Reference no: EM131230451

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