If the exchange rate at time t is Et = €1/$.   You invest $1 in an euro asset at t, which has an interest of 8%.  When the asset expires at t+1, you get paid €            (x.xx round to two decimal places).  If

Suppose the Australian dollar floats against the US dollar and the demand for Australian dollars in the foreign exchange market is given by Q = 125 - 50E where Q denotes the quantity of AUD and E denotes the nominal exchange rate expressed in USD per AUD.  The supply of Australian dollars is given by Q = 25 + 50E. What is the equilibrium nominal exchange rate? 0.751.250.501.00

There is a flexible exchange rate system and only two countries in the world, the United States and Mexico. If the inflation rate in the United States rises relative to the inflation rate in Mexico, it follows that both the dollar and the peso will appreciate, although the peso will appreciate before the dollar appreciates. both the dollar and the peso will depreciate, although the peso will depreciate before the dollar depreciates. the dollar will appreciate, and the peso will depreciate. There is not enough information to answer the question. the dollar will depreciate, and the peso will appreciate.

A UK-manufactured car sells for GBP 14.000. A french-manufactured car sells for EUR 15.750.  If the EUR/GBP exchange rate is 1.17, how much does the french-made car cost in GBP? a. 13.467 b. 14.500 c. 16.380 d. 18.427

Imagine you are a German investor trying to decide whether to buy American or European bonds. A ten-year bond issued by America’s Treasury today offers about 3%; German bonds return only 1.2%. But buying American means taking a gamble on the euro-dollar exchange rate. You are interested in the return in euros. The bond issued in the US will be attractive only if the extra yield exceeds any expected loss due to swings in currency markets. This thinking explains why the dollar has recently soared against the euro. In July 2022 the dollar reached a one-for-one exchange rate with the euro for the first time since 2002. Is it always true that a currency appreciates in value when the interest rate it offers increases relative to foreign interest rates? Explain.

Suppose Angola is experiencing an episode of hyperinflation. The currency in Angola is the second kwanza (which is actually the fourth currency called kwanza that has circulated since 1977). The currency code is (AOA).   Select all choices below that are implied by the statement if parity conditions (PPP, IRP, FEP) hold:   Nominal interest rates in Angola will exceed nominal interest rates in countries not experiencing hyperinflation. The value of the AOA is expected to drop to zero. Real interest rates in Angola will fall relative to countries without hyperinflation. The AOA is expected to depreciate against any currencies that are not experiencing hyperinflation.

Data from The Economist BigMac index from January 2021 shows that the localprice of a Big Mac in Denmark is 30 Danish kroner (DKK) and the price of aBig Mac in Costa Rica is 2350 Costa Rican colón (CRC). The exchange rateXCRC/DKK = 100.279. Assume there is no bid-ask spread. Calculate the Purchasing Power Parity Rate PPPRCRC/DKK. What does this ratemeasure?

Assume that you buy a 1-year, 168,000-peso Philippine bond that pays 9 percent when the exchange rate is 1 Canadian dollar for 42 pesos. If, after one year, the peso falls to 1 Canadian dollar equals 45 pesos, how much have you gained or lost in Canadian dollars? Round your answer to the nearest dollar amount. loss * $ 4353

If one U.S. dollar is traded on the foreign exchange market for about 0.89 euros, then one euro can purchase about U.S. dollars. a) 0.75 b) 1.12 c) 1.75 d) 0.89

Suppose you & classmates are marketing team assembled by your Brazil based firm To estimate demand in the U.S. market for its newly developed product. The market Research firm you hired requires $150,000 to perform a thorough study. But your Group is informed that total research budget for the year is 3 million Brazilian real & That no more than 20% of the budget can be spent on any one project. 16 points a. If the current exchange rate is 5 real/$, will you have the market study Conducted? Why or why not? (show your calculations) b. If the current exchange rate is 3 real/$, will you have the market study Conducted? Why or why not? (show your calculations) c. At what exchange rate your decision from rejecting the proposed research project to accept the Project?