Money Exchange
Not what you're looking for?
Shown below are exchange rates for several currencies in relation to the U.S. dollar.
Euro Swiss Franc Mexican Peso
Spot rate 0.90 1.70 11.00
30-day forward rate 0.92 1.80 10.95
60-day forward rate 0.93 1.85 10.70
a. Is the euro appreciating or depreciating against the U.S. dollar? Why?
b. Is the Swiss franc appreciating or depreciating against the U.S. dollar? Why?
c. Is the Mexican peso appreciating or depreciating against the U.S. dollar? Why?
d. Using cross-rates, how many francs will the euro buy, how many pesos will the franc buy, and how many euro will the peso buy?
Purchase this Solution
Solution Summary
This solution is comprised of a detailed explanation to answer the euro, Swiss franc, Mexican peso appreciating or depreciating against the U.S. dollar, and using cross-rates.
Solution Preview
Money Exchange
Shown below are exchange rates for several currencies in relation to the U.S. dollar.
Euro Swiss Franc Mexican Peso
Spot rate 0.90 1.70 11.00
30-day forward rate 0.92 1.80 10.95
60-day forward rate 0.93 1.85 10.70
a. Is the euro appreciating or depreciating against the U.S. dollar? Why?
In order to find the appreciation or depreciation of currency, you should use the following formula:
Forward rate - Spot rate x Number of time/year
Spot rate
30-day forward rate 0.92 - 0.90 x 12 = 26.67%
0.90
60-day forward rate 0.93 - 0.90 x 6 = 20%
0.90
$1 = euro 0.90
The euro is depreciating against U.S. dollar because its 30-day and 60-day ...
Purchase this Solution
Free BrainMass Quizzes
Basics of corporate finance
These questions will test you on your knowledge of finance.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Basic Social Media Concepts
The quiz will test your knowledge on basic social media concepts.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.