Assume the following  information:                                                                                                           Quoted Price   Value of Canadian dollar in U.S. dollars                                           $.90 Value of New Zealand dollar in U.S. dollars                                    $.30 Value of Canadian dollar in New Zealand dollars                     NZ$3.02 Given  this information,  is triangular  arbitrage possible?   If so, explain  the steps that would reflect triangular arbitrage, and compute the profit from this strategy if you had $1,000,000  to use. What market  forces would  occur  to eliminate   any  further  possibilities   of triangula r arbitrage?

5) Which of the following will cause a movement from one point on an AD curve to another point on the same AD curve? a) a change in government expenditures b) a change in the price level c) a change in net exports d) all of the options provided 6) Here is a consumption function: C = CO + MPC(Yd). If MPC is 0.80, then we know that a) as Co rises by $0.80, Yd rises by $1. b) Yd rises by $0.80. c) as Yd rises by $1. Co rises by $0.80. d) as Yd rises by $1, C rises by $0.80. 7) An aggregate demand (AD) curve shows the a) none of the options provided is correct b) quantity of output that people are willing and can afford to buy at different price levels, ceteris paribus c) quantity of output that people are willing as well as able to produce and sell at different price levels, ceteris paribus. d) value of a particular good that people are willing and able to buy at a particular price, ceteris paribus. d) value of a particular good that people are willing and able to buy at a particular…

28) If we are using foreign currency for the NPV decision, all we have to do is restate all the ________ in terms of present value and use the current exchange rate.   A) salvage value   B) foreign incremental cash flow   C) domestic incremental cash flow   D) None of these

Which of the following is true? A large increase in the income level in Singapore along with no growth in the U.S. income level is normally expected to cause (assuming no change in interest rates or other factors) an increase in Singapore demand for U.S. goods, and the Singapore dollar should depreciate. If inflation in Australia suddenly increased while U.S. inflation stayed the same, there would be an outward shift in the demand schedule for AU$ and an inward shift in the supply schedule for AU$. (AU$ stands for the Australian dollar.) For a U.S. speculator, when expecting a foreign currency to depreciate, a possible way to speculate on this movement is to borrow dollars, convert the proceeds to the foreign currency, lend in the foreign country, and use the proceeds from this investment to repay the dollar loan. The main effect of interest rate movements on exchange rates is through their effect on international trade.

Suppose you are working for a company based in Ireland (where the euro is used). This company exports product to the UK, but invoices its prices in euros (instead of pounds). Suppose you believe the euro will appreciate versus the pound over the coming year. Would that impact the profitability of your company this year? If not, explain. If so, explain how (and the type of risk you’re facing.

Which of the following is/are TRUE with respect to spot market liquidity? I. The market liquidity improves if more buyers and sellers willing to participate in the currency trading. II. The spot markets for heavily traded currencies such as the Euro and Pound are very liquid. III. A currency's liquidity affects the ease with which an MNC can obtain or sell that currency. IV. If a currency is illiquid, an MNC is typically able to quickly purchase that currency at a reasonable exchange rate. A. I, II, III B. I, III, IV C. II, III, IV D. I, II

Assume your firm has transferred you to Zurich Switzerland. You work in the triangular arbitrage division. View the following exchange rates. Is an arbitrage opportunity available? If not, explain why an opportunity does not exist. If so, from the Swiss point of view show how to exploit the opportunity. CHF .8976 = $1.00, $.0130 = INR 1.00, INR 92.7904 = CHF 1 Now say instead of working in Zurich, you were employed in Mumbai, India. How does that change your thinking on the arbitrage?     PLEASE ANWSER CORRECTLY AND SHOW WORK

fINANCE

If a U.S.-based MNC focused completely on exporting, then its valuation would likely be adversely affected if most currencies were expected to appreciate against the dollar over time. Group of answer choices True False

Suppose a U.S. multinational company needs to buy Canadian dollar but the exchange rate between US dollar and Canadian dollar is not favorable for the company because of high bid-ask spread. However, the currency pair between Canadian dollar and Japanese Yen is favorable due to its low bid-ask spread. So, you want to find the cross-exchange rate between Canadian dollar and Japanese Yen. Assume the Canadian dollar is equal to $.76, and the Japanese Yen is equal to $.007. The value of the Canadian dollars is Japanese Yen. 93.67 108.57 164.54 118.34 27