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1) One year ago, a United State investor converted dollars to yen and purchased one hundred shares of stock in a Japanese company at a price of 3,150 yen per share. The stocks total purchase cost was 315,000 yen. At the time of purchase, in the currency market 1 yen equaled $0.00952. Today, the stock is selling at a price of 3,465 yen per share, and in the currency market $1 equals 130 yen. The stock does not pay a dividend. If the investor were to sell the stock today and convert the proceeds back to dollars, what would be his realized return on his initial dollar investment from holding the stock?a. +10.00%b. -11.12%c. +12.48%d. +11.12%
2) A computer costs $1,100 in the United States. The same computer costs 1,265 euros in Italy. Assuming that purchasing power parity (PPP) strictly holds, what is the spot exchange rate between the dollar and the euro?a. $3.75 = 1 eurob. $1.00 = 2.50 eurosc. $1.00 = 0.869565 eurod. $1.15 = 1 euroe. $1.00 = 1.15 euros
3) A product sells for $750 in the United States. The exchange rate is such that $1 equals 1.0279 euros. If purchasing power parity (PPP) holds, what is the price of the product (in euros) in the EMU countries?a. 123.750 eurosb. 454.550 eurosc. 750.000 eurosd. 770.925 eurose. 925.393 euros
Decko Corporation is a United State firm with a Chinese subsidiary that produces cell phones in China and sells them in Japan. This subsidiary pays its wages and its rent in Chinese yuan,
Assume that under the Bretton Woods system, dollar is pegged to gold at a rate of $35 a ounce and pound sterling is pegged to the dollar at a rate of $2 = £1.
A United State Company, has a subsidiary in Europe. it is deciding whether to invest $2 million of its (the parent company) funds in a 3 year project in Europe.
Following are parameters for an open economy open economy where C=10+.8(y-T); I=10 G=10 T=10 and imports and exports are given by IM=.3Y and X=.3Y* respectively where Y is foreign output.
Assume the United State dollar price of a British pound is $1.50; dollar price of a euro is $1; a hotel room in London, England, costs 120 British pounds;
Political Economy and Foreign Direct Investment - Review the country's political economy
Global marketing managers must understand economics and trade rules of countries and regions within which they trade.
In September 1983, it took 245 Japanese yen to equal $1. More than twenty years later that exchange rate had fallen to 108 yen to $1.
The firm produces a global positioning system that sells for $1,000 with costs of goods sold of 48 percent of sales. Compared to the US, China offers a 6 percent cost reduction
Assume the dollar-pound rate equals $.5 per pound. According to purchasing power parity theory, determine the dollar's exchange rate under each of the following scenarios?
The Big Mac Price Index calculated through the Economist has consistently found the United State dollar to be undervalued against some other major currencies,
n the flexible exchange rate system, discuss the effects of the following events on the exchange rate between U.S. dollar and Japanese Yen: Please indicate whether US$ will appreciate or depreciate.
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