Forecast whether the pound will appreciate or depreciate

Assignment Help Accounting Basics

Reference no: EM131198706

Assessment by the Sports Exports Company of Factors That Affect the British Pound's Value

Because the Sports Exports Company (a U.S. ?rm) re- ceives payments in British pounds every month and converts those pounds into dollars, it needs to closely monitor the value of the British pound in the future. Jim Logan, owner of the Sports Exports Company, expects that in?ation will rise substantially in the

United Kingdom, while in?ation in the United States will remain low. He also expects that the interest rates in both countries will rise by about the same amount.

1. Given Jim's expectations, forecast whether the pound will appreciate or depreciate against the dollar over time.

2. Given Jim's expectations, will the Sports Exports Company be favorably or unfavorably affected by the future changes in the value of the pound?

The website of the Federal Reserve Board of Governors provides exchange rate trends of various currencies. Its address is https://www.federalreserve.gov/releases/.

1. Click on the section "Foreign Exchange Rates" monthly. Use this Web page to determine how ex- change rates of various currencies have changed in recent months. Note that most of these currencies (except the British pound) are quoted in units per dollar. In general, have most currencies strength- ened or weakened against the dollar over the last 3 months? Offer one or more reasons to explain the recent general movements in currency values against the dollar.

2. Does it appear that the Asian currencies move in the same direction relative to the dollar? Does it appear that the Latin American currencies move in the same direction against the dollar? Explain.

3. Go to https://www.oanda.com/convert/fxhistory. Obtain the direct exchange rate ($ per currency unit) of the Canadian dollar for the beginning of each of the last 12 months. Insert this informa- tion in a column on an electronic spreadsheet. (See Appendix C for help on conducting analyses with Excel.) Repeat the process to obtain the direct ex- change rate of the euro. Compute the percentage change in the value of the Canadian dollar and the euro each month. Determine the standard devia- tion of the movements (percentage changes) in
the Canadian dollar and in the euro. Compare the standard deviation of the euro's movements to the standard deviation of the Canadian dollar's move- ments. Which currency is more volatile?

Reference no: EM131198706

Questions Cloud

How much will ella need to save annually over next 30 years : Assuming her account will earn 10% interest during the next 30 years and 6% interest afterwards forever, how much will Ella need to save annually over the next 30 years to fund her retirement account?

Discuss the future of the cloud in terms of free services : Elasticity is a key characteristic of the cloud computing model. Create a scenario where a company that offers cloud on-demand solutions would benefit from scaling its resources. Determine the types of metrics you would consider when scaling your ..

What will be the decrease in the volume of the block : what will be the decrease in the longest side of the block, assuming that the material remains within the linear elastic region? What will be the decrease in the volume of the block?

How are the terms judge of the court define under court act : How are the terms 'Judge of the Court' and 'Associate Judge' defined under the Supreme Court Act 1986 (Vic)? Explain in your own words. Are the definitions open or closed definitions

Forecast whether the pound will appreciate or depreciate : Given Jim's expectations, will the Sports Exports Company be favorably or unfavorably affected by the future changes in the value of the pound?

Describe the pressures experienced by the company : If you were the key decision maker of this company, what operational areas or periodic measures would you consider monitoring to ensure that your responses are effective and proper.

Determine the average shear stress developed by the friction : determine the average shear stress developed by the friction force on the tires. Assume the rubber of the tires is flexible and each tire is filled with an air pressure of 32 psi.

Write about algorithms and pseudocode : Write about algorithms and pseudocode. Reflect back on this course- what element of this course has helped you analyze these algorithms most? Why? What resource have you found that would help you analyze an algorithm.

What would probably be involved in a generous tax holiday : The local school district is opposed to any "generous tax holiday."- What would probably be involved in a generous tax holiday? - Why would the school district be opposed?

User Account

All Pages