refers to the purchase of a foreign currency when the domestic rrency falls or is low, in the expectation that it will soon rise, thus peculation culation
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- 1. What is the exchange rate between the U.S. and Germany? Has there been appreciation or depreciation of the U.S. dollar relative to Germany's currency? 2. As a manager, how does this affect your decision to expand into Germany? Will it affect your costs or ability to produce in Germany? 3. Would you recommend your firm expand into Germany? If so, would you produce the product/service in Germany? Would you expand to sell the product/service to a new target market? If you don’t think your firm should expand into Germany, why?2. A source of supply of foreign exchange is a) Donations given b) Imports c) Exports d) GiftsAssume that you are a Canadian living in Canada, and have $1,000CDN and you are debating about where to invest it for one year: in Canada or in the USA. Currently, the market interest rate in Canada (ICAN) is 7.00% and in the USA, the market interest rate (ius) is 6.00%. The current exchange rate is $1USD= $1.35CAD. The spot exchange rate (R) has US currency in the denominator and Canadian currency in the numerator. The forward exchange rate (F) is the spot exchange rate one year from now. Using above information, complete the below statements, filling in your final, complete answer in the space/box provided to the right of the statement. Do not show your work.
- 1. Suppose that the equilibrium exchange rate between the United States and South African is 15.13 Rand per US dollar. Further suppose that the two countries are trading partners with each other. Inflation now rises in South Africa. Which of the following answer choices correctly represents the shift that would occur in the US foreign exchange market? The supply of US dollars would fall. The demand for South African Rands would rise. The supply of South African Rands would rise. The supply of US dollars would rise.3) State whether each of the following events involves a financial flow to the U.S. economy or away from the U.S. economy: a. Export sales to Germany b. Returns being paid on past U.S. financial investments in Brazil c. Foreign aid from the U.S. government to Egypt d. Imported oil from the Russian Federation e. Japanese investors buying U.S. real estate4. Suppose that the South African interest rate is 4% and the U.S. interest rate is 6%. If the expected future spot exchange rate one year from now is 6.05 Rand per US dollar and uncovered interest rate parity holds, what must the current spot exchange rate (number of Rands per Dollar) be in order to clear the foreign exchange market?
- 3) Calculate the change in net barter terms of trade for country B given that the price of exports has increased 25%, export volume grew 10% and the price of imports increased 30%. Is country B better or worse off?21. What does Foreign Exchange mean? Why do we see currency fluctuations?12. Imagine that you are the manager of a company considering direct foreign investment. What country would you choose? Discuss the risks and benefits, government incentives, and political factors you considered in your decision. Please do not use anything that's already posted. Thanks.
- ASAP 9) Suppose that Americans decide to increase their saving.a. If the elasticity of US net capital outflow with respect to the real interest rate is very high, will this increase in private saving have a large or small effect on US domestic investment?b. If the elasticity of US exports with respect to the real exchange rate is very low, will this increase in private saving have a large or small effect on the US real exchange rate?6. An increase in capital inflows in South Africa will result in a (n) _________foreign currency and a (n)_______the South African Rand in the foreign exchange market. (4 marks)A Increase in the demand for; increase in the supply ofB Increase in the supply of; increase in the demand forC Shortage of; surplus ofD Surplus of; shortage ofQuestion 29 If the exchange rate between the Japanese yen and the U.S. dollar changes from 136.16 to 136.61 yen per dollar, then the yen has_ relative to the dollar and Japanese goods will become in the United States, everything else held constant. Select one: A appreciated; more expensive B. appreciated; cheaper C. depreciated; more expensive D. depreciated; cheaper