Suppose one British pound can purchase 1.32 U.S. dollars today in the foreign exchange market, and currency forecasters predict that the U.S. dollar will appreciate by 22.0% against the U.S. dollar over the next 30 days. How many dollars will a pound buy in 30 days?
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Suppose one British pound can purchase 1.32 U.S. dollars today in the foreign exchange market, and currency
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- Suppose one Euro can purchase 1.25 U.S. dollars today in the foreign exchange market, and currency forecasters predict that the Euro will depreciate by 20% against the US dollar over the next 60 days. How many dollars will a Euro buy in 60 days? (Please show work)Suppose the british pound U-S.dollar exchange rate is currently So =£.50.Further suppose that the inflation rate in britain is predicted to be 10percent over the year coming year and(for the moment)the inflation rate in the united states is predicted to be zero. What do you think the exchange rate will be in a yearWhat would be the expected foreign exchange rate in a year from now if the current exchange rate is 68.76 RUR/EUR, and expected annual inflation is 3.5% in Russia and 0.7% in the EMU?
- Suppose it takes 1.3037 U.S. dollars today to purchase one British pound in the foreign exchange market, and currency forecasters predict that the U.S. dollar will depreciate by 15% against the pound over the next 30 days. How many dollars will a pound buy in 30 days?Suppose that you are a US-based importer of goods from the United Kingdom. You expect the value of the pound to increase against the U.S. dollar over the next 30 days. You will be making payment on a shipment of imported goods in 30 days and want to hedge your currency exposure. The U.S. risk-free rate is 4.0 percent, and the UK risk-free rate is 30 percent. These rates are expected to remain unchanged over the next month. The current spot rate is $2.10. a. Whether you should use a long or short forward contract to hedge the currency risk O Long position in forward contract O Short position in forward contract b. Calculate the no-arbitrage price at which you could enter into a forward contract that expires in 30 days. (Do not round intermediate calculations. Round your answer to 4 decimal places.) No-arbitrage price c. Move forward 10 days. The spot rate is $2.13. Interest rates are unchanged. Calculate the value of your forward position. (Do not round intermediate calculations. Round…Suppose that the current exchange rate between the Japanese yen (¥) and the U.S. dollar ($) is ¥100 = $1. A financial analyst predicts that the exchange rate will be ¥94 = $1 next year. If the analyst uses purchasing power parity as the basis of the prediction, the analyst expects that the yen will
- Suppose the Dollar Interest Rate and the Pound Sterling Interest Rate are the same, 5 percent per year. What is the relation between the Current Equilibrium $/£ Exchange Rate and its Expected Future level? Suppose the Expected Future $/£ Exchange Rate, $1.52 per pound, remains constant as Britain's Interest Rate rises to 10 percent per year. If the U.S. Interest rate also remains constant, what is the New Equilibrium $/£ Exchange Rate?Suppose a basket of goods in Paris costs €134 and the same basket purchased in New York costs $151. a. At what exchange rate between euros and dollars is the cost of the basket the same in each city? b. Now suppose that over the next year inflation in France is expected to be 3% while in the U.S. the forecast is for 7% inflation. What exchange rate do you expect a year from now?Suppose that the interest rate on a US dollar deposit is 3% and the interest rate on a Japanese yen deposit is 1%. Today’s exchange rate is $1/¥ and the expected rate one year in the future is $1.2/¥, so $100 today can be exchanges for ¥100. Which currency deposit yield a higher expected rate of return (which currency investors should be willing to hold)? Why?
- Suppose that you are a U.S.-based importer of goods from the United Kingdom. You expect the value of the pound to increase against the U.S. dollar over the next 60 days. You will be making payment on a shipment of imported goods in 60 days and want to hedge your currency exposure. The U.S. risk-free rate is 4.2 percent, and the U.K. risk-free rate is 1 percent. These rates are expected to remain unchanged over the next 2 months. The current spot rate is $1.3084. Calculate the no-arbitrage price at which you could enter into a forward contract that expires in 60 days. (X.XXXX)1.A research institution has just published projected inflation rates for the United States andGermany for the next year. U.S. inflation is expected to be at 10% per year while German inflationis expected to be at 4% per year. If the current exchange rate is $0.95/€, what should be theexchange rate for the next years? 4. Suppose exchange rate for the British pound, Euro, and Australia dollar were $1.400, $1.225, and$0.875, respectively. At the time, the associated 90-day interest rates (annualized) were 12%, 6%,and 4%, while the U.S. 90-day interest rate (annualized) was 8%. What was the 90-day forwardrate on a Dollar Currency portfolio (DCP) (DCP 1 = £1 + €1 + AU$1) if interest parity were tohold?Suppose that the annualized inflation in the US is 3% while annual inflation in Europe is 1%. If the current exchange rate is $1.40 per Euro that would you expect the exchange rate to be in one year? If the exchange rate one year from now turns out to be $1.50 per Euro, what has happened to the real exchange rate?