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- 13.) What are derivative securities? Why do they exist? 14.) 2020 was year the COVID-19 global pandemic. Specifically explain how both monetary and fiscal policy have been used in the United States as a reaction to date. 15.) What causes the basic changes to overall supply and demand for money and loanable funds?During crises like the COVID-19 crisis, major currencies such as U.S. Dollar and Euro should appreciate against currencies associated with developing countries. Do you agree with this statement? Discuss. Your answer should be linked to different concepts (e.g., PPP, IRP, IFE, and currency hedging)H3. The Central Bank of the Bahamas pegs the Bahamian Dollar to the United States Dollar at a price of 1 BSD per USD. As an analyst for XYZ Consulting Inc., you have been asked to predict the behavior of key macroeconomic variables in the Bahamas for different policy scenarios. Using all the appropriate diagrams, your analysis must describe the Bahamian money and output markets, as well as the foreign exchange market. To perform this task, you must assume that prices are sticky: fixed in the short-run and flexible in the long-run. The scenarios are: a) A temporary restrictive monetary policy in the Bahamas. b) A temporary restrictive fiscal policy in the Bahamas.
- 46 FDI often involves the establishment of new production facilities in foreign countries such as Honda's Ohio plant. ut of Select one: O True O False 47 The world beta" measures the ut of Select one: O a risk of default and bankruptey. O b risk-adjusted performance. O c.unsystematic risk. O d sensitivity of returns on a security to world market movements.Q1-16 In which of the following relationships between the expected future spot rate [E(e)] of a foreign currency and the current forward rate (efwd) of a foreign currency would a speculator have an incentive to sell foreign currency in the forward market? a. E(e) < efwd b. E(e) > efwd c. E(e) = efwd d. E(e) = (1/efwd)When the value of the euro increases compared to the U.S. dollar, the price of U.S. exports to Europe will decrease. True or False True FalseAssume that a country, due to speculation in the foreign exchange market, faces a sudden capital outflow (see figure below). If the country has high levels of foreign denominated debt and inadequate foreign reserves answer the following questions, [Questions 17,18,19] e-Exchange Rate Short Run NX NCO, NY, A shift in the NCD curve dae to a sudden capital outflow NCO before NCO her Long Ran NX NX, NCO Question 17: In a free float foreign exchange rate regime the country will experience immediately. a. an increase in NX due to currency devaluation at NX b. business bankruptcies due to currency devaluation e a devaluation of its currency from e to e d. a devaluation of its currency from esto es with no change in NX e all of the aboveQ3 (Exercise 5.18) Suppose the current exchange rate between Germany and Japan is 0.02 €/¥. The euro-denominated annual continuously compounded risk-free rate is 4% and the yen-denominated annual continuously compounded risk-free rate is 1%. What are the 6-month euro/yen and yen/euro forward prices?Question 11 One of the major objectives for a central bank is to stabilize the domestic currencies. Assume that the value for SAR against EURO above 10% band of price movement. How does the Saudi Central bank lower the value of SAR within upper bound? Show the effect using Demand and supply for SAR against EUROPQ17 In view of the theory of optimum currency areas, a country would be a good candidate for membership in such an area if it had a _______ degree of factor mobility with other potenttial member countries of the currency area and if the country were a relatively _____ economy a. low / closed b. low/open c. high /closed d. high / openPQ 3 In which of the following relationships between the expected future spot rate (E(e)) of a foreign currency and the current forward rate (e fwd) of a foreign currency would a speculator have an incentive to sell foreign currency in the forward market? a. E (e) = e fwd bb. E(e) greater than e fwd c. E(e) less than e fwd d. E (e) = (1/d fwd)Suppose that the Reserve Bank of New Zealand believes the New Zealand dollar (NZD) is too weak and wishes to conduct a NZD5,000,000 unsterilized foreign exchange market intervention. Which of the following is correct with regards to its balance sheet? Liabilities would decrease by NZD5,000,000 worth of Treasury bills Assets would increase by NZD5,000,000 worth of currency in circulation Liabilities would increase by NZD5,000,000 worth of currency in circulation Assets would decrease by NZD5,000,AIE Ah of foreign reservesSEE MORE QUESTIONS
