Suppose safe one-year bonds earn 4% in the U.S. and 2% in the U.K. If the expected future exchange rate is $3.00 per pound, what is the current spot rate? Selected answer will be automatically saved. For keyboard navigation, press up /down arrow keys to select an answer. a $2.94, b $2.97 $3.03 d $3.06

5/variants/950245/take/10/ On a supply and demand graph with the quantity of dollars on the horizontal axis and the price of pesos in dollars on the vertical axis, what happens to the exchange rate if the demand for dollars decreases? Press the hotspot that shows the exchange rate if the demand for dollars decreases, and then press the answer box to save your selection. Price of pesos in dollars Y 21 Total Questions Answered ********* QUE HAGE LANGE MOET DOLE ARE DO ******** MAE ARE NOE DUDELAUT DE QUE ELE hapa kwa JE ME NE DRE DEELNEMENDE NUK DENETLE GARALAM TENDE DIE WE ARE PAR ******** D1 Previous exchange rate Quantity of dollars S DO 8035560000000000001 anges Saved < V ✰ ✰ Continue 6/6

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a) Using the following information, determine each one of the theoretical Exchange Rates (E.R.) according to International Fisher Effect. b) Show how Money Market Arbitrage could be done assuming that the loan is 1,000 units of the currency of the country where the loan is contracted. Determine the profit in the currency in which the loan was contracted. ΜARKET ΜARKET E.R. E.R. COUNTRY CURRENCY INTEREST Dec-01 Dec-02 Dec-02 Mexico MXP 12 % 19.56 20.15 Turkey TRY (Lira) 6 % 5.9419 6.07673 Australia AUD 4 % 1.7759 1.81183 Jаpan JPY 8 % 105.866 113.978 United GBP 5 % 0.5991 0.617849 Kingdom (UK) South Korea KRW (Won) 9% 1,658.62 1,793.37 Canada CAD 5 % 1.3736 1.4942 U.S.A.. USD 3%

Suppose that a U.S. company wishes to purchase goods from a German producer. The U.S. firm agrees to take the delivery of the goods in three months and to pay €1 million Euros at that time. This company wishes to avoid this exchange rate risk by buying Euros at the 3-month forward rate, f = 0.95 (€/$). Then, how much this company would have to pay in US dollars in exchange for €1 million Euros? a. $1 million dollars. b. $1,052,632 dollars. c. $950,000 dollars.

Assume an American firm takes a long position on British Pound call options. The premium is $0.05, and the strike price is $1.45. When the firm executed the option, they were able to save $150,000 total. If the total contracts were enough to buy 560,000 pounds, what was the asking price of the pound in US dollars?

Explain partially convertible currency

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Given the following data R = $1/¥105 F = $1/¥140 i(u.s.) = 10% What is the interest rates in Japan if the interest parity condition holds