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# Foreign Exchange Rates

### Multiple choice questions on Derivatives, futures, options, currencies, hedges, exchange rate risk

I need help in answering the questions below. Please provide your answers on the Excel Answer Template attached. 1. Graylon, Inc., based in Washington, exports products to a German firm and will receive payment of ?200,000 in three months. On June1, the spot rate of the euro was \$1.12, and the 3-month forward rate was \$1

### The Gold Standard and Foreign Exchange Markets Summary

As fluctuating currency rates are an important aspect of international dealings, knowing how foreign exchange markets function will help ensure your success in the international business. Keep in mind the history of the gold standard for this question. Scenario: You have been asked by a local college to write a lecture that

### Foreign Exchange

You just came back from Canada, where the Canadian dollar was worth \$.70. You still have C\$200 from your trip and could exchange them for dollars at the airport, but the airport foreign exchange desk will only buy them for \$.60. Next week, you will be going to Mexico and will need pesos. The airport foreign exchange desk will se

Compute the bid/ask percentage spread for Mexican peso retail transactions in which the ask rate is \$.11 and the bid rate is \$.10. If the direct exchange rate of the euro is worth \$1.25, what is the indirect rate of the euro? That is, what is the value of a dollar in euros? Assume Poland's currency (the zloty) is worth \$.

### Currency Exchange Rates Analysis

Please complete a paper about currency exchange rates using data analysis and descriptive statistics. Must have in-text citation. Please reference all sources used.

### Wang Xiaoming currently has a deposit of HK\$ 5 million in a public bank and is planning to convert his HK\$ 5 million into one-year fixed deposit in HK dollar at an annual interest rate of 1.25%. However, Wang Xiaoming has just received a call from Chen Dawen, director of Personal Finance of the public bank, saying that they are promoting two foreign currency deposit/investment schemes as follows:

Wang Xiaoming currently has a deposit of HK\$ 5 million in a public bank and is planning to convert his HK\$ 5 million into the one-year fixed deposit in HK dollar at an annual interest rate of 1.25%. However, Wang Xiaoming has just received a call from Chen Dawen, director of Personal Finance of the public bank, saying that they

### Risk managment problem: arbitrage profits in currency exchanges

17-5. (Exchange rate arbitrage) You own \$10,000. The dollar rate in Tokyo is 216.6743. The yen rate in New York is given in the preceding table. Are arbitrage profits possible? Set up an arbitrage scheme with your capital. What is the gain (loss) in dollars? ST-1. You own \$10,000. The U.S. dollar rate on the New Zealand d

### International Finance: Economic & Transaction Exposure

How is economic exposure different from transaction exposure? Please give an example of each.

### Exchange Rate: Foreign Exchange Loss Incurred

Siam Cement, the Bangkok based cement manufacturer suffered enormous losses in the Asian crisis in 1997. The company had been pursuing a very aggressive growth strategy in the mid 1990s, taking on massive quantities of foreign currency denominated debt (primarily U.S dollars). When the Thai Baht was devalued from its pegged rate

### Mergers, Acquisitions, Financial Distress and Int Finance

Please see the attached question. The following table shows the projected cash flows and their respective discount rates after the acquisition of SFC by WC. Fill in the blanks and calculate the stock price of the new firm if it has \$100 million of debts and 5 million shares of stock outstanding... Q1- The following table

### Trade Credit, implied annual yield of Treasury bond futures, exchange rate

1. An Industry sells on terms of 3/10, net 30. Total sales for the year are \$912,500. Forty percent of the customers pay on the 10th day and take discounts; the other 60% pay, on average, 40 days after their purchases. a. What are the days sales outstanding? b. What is the average amount of receivables? c. What would h

### Industry Specific Issues: Cuba, Puerto Rico, Jamaica, Bahamas, Bermuda, Dominican Republic, Haiti, and Cayman Islands

I ned some help with Industry Specific Issues for the following countries (please provide resources): CUBA, PUERTO RICO, JAMAICA, BAHAMAS, BERMUDA, DOMINICAN REPUBLIC, HAITI and CAYMAN ISLANDS -Real Estate industry? -Tourism industry? -Other industries of interest? -Trade Opportunities Postings found on listed websi

### Breakeven Level Depreciation

Assume the U.S. one year interest rate is 11% and the French one year interest rate is 18%. The break even level of depreciation in the euro at which the U.S. and French investments would exhibit the same return to a U.S. investor is?

### Britain entry into exchange rate mechanism of the EMS

When Britain announced its entry into the exchange rate mechanism of the EMS on October 5, 1990, the price of British gilts (long term government bonds) soared and sterling rose in value. a. What might account for these price jumps? b. Sterling entered the ERM at a central rate against the DM of DM 2.95, and it is allowed

### Floating exchange rate system

Comment on the following statement: "A system of floating exchange rate fails when governments ignore the verdict of the exchange markets on their policies and resort to direct controls over trade and capital flows."

### Currency board vs central bank with nominal exchange rate target

Describe the chief differences between a currency board and a central bank with a nominal exchange rate target.

### Gorbachev and ruble's exchange rate

In January 1991, President Mikhail Gorbachev banned all 50-ruble and 100-ruble bills, while permitting Soviet citizens to change only 1,000 rubles in these large bills into smaller denominations. In addition, savings-bank accounts were frozen for six months. The object of these measures was to strip the country's powerful black

### Russian central bank

As the year 1992 began, the Russian government and the central bank tightened credit in an attempt to slow the growth in the supply of rubles. However, the moves weren't popular with the country's giant state-run industrial enterprises, which are still dependent on official subsidies and cheap credit. In July 1992, the Russian P

### Likely reaction of the foreign exchange market

On November 28, 1990, Federal Reserve Chairman Alan Greenspan told the House Banking Committee that despite possible benefits to the U.S. trade balance, "a weaker dollar also is a cause for concern." This statement departed from what appeared to be an attitude of benign neglect by U.S. monetary officials toward the dollar's depr

### Six scenarios, value of dollar relative to the Japanese yen.

For each of the following six scenarios, say whether the value of the dollar will appreciate, depreciate, or remain the same relative to the Japanese yen. Explain each answer. Assume that exchange rates are free to vary and that other factors are held constant. a. The growth rate of national income is higher in the United St

### Affect of Transactions on Present and Future Exchange Rates

Describe how these three typical transactions should affect present and future exchange rates. a. Seagram imports a year's supply of French champagne. Payment in French francs is due immediately. b. American Motors sells a new stock issue to Renault, the French car manufacturer. Payment in dollars is due immediately. c.

### Determination Of Exchange Rates

Suppose prices start rising in the United States relative to prices in Japan. What would we expect to see happen to the dollar:yen exchange rate? Explain. If a foreigner purchases a U.S. government security, what happens to the supply of, and demand for, dollars?

### International Finance: Multiple Choice Questions. J curve, real interest rate, options, spot rate, international Fisher effect, translation exposure, diversification, cash flow from operations, firm's cost of capital, international trade, interest rate parity, expected effective financing rate, inter-subsidiary leading or lagging strategies, covered interest arbitrage, CAPM

1. The "J curve" effect describes ? the continuous long-term inverse relationship between a country's current account balance and the country's growth in gross national product ? the short-run tendency for a country's balance of trade to deteriorate even while its currency is depreciating ? the tendency for exporters to initi

### Hedge

Need help getting started on a paper for the following - When you sell a product made in the Euro area in the U.S. The price increases have sharply cut you sales. You are worried that the Euro will increase again causing a further loss. You can buy a currency hedge for 2009 that would allow you to convert dollars into Eur

### Foreign exchange rates and U.S. interest rates

Suppose the Federal Reserve Bank of the US unexpectedly raises interest rates in the US. How do you think this will impact the foreign-exchange market?

### Boisjoly Watch Imports Exchange Rate Changes

Boisjoly Watch Imports has agreed to purchase 15,000 Swiss watches for 1 million francs at today's spot rate. The firm's financial manager, James Destreumaux, has noted the following current spot and forward rates: U.S.Dollar/Franc Franc/U.S. Dollar Spot 1.6590 0.6028 3

### Concept of adequate disclosure issues facing accountants

The concept of adequate disclosure continues to be one of the most important issues facing accountants. Disclosure may take various forms. If you should analyze the following: The various forms of disclosure available in published financial statements .The disclosure issues addressed by the: .AICPA's Code of Professional

### Middle American Corporation (MAC) produces a line of corn silk cosmetics.

18. Middle American Corporation (MAC) produces a line of corn silk cosmetics. All of the inputs are purchased domestically and processed at the factory in Des Moines, Iowa. Sales are only in the United States, primarily west of the Mississippi. a. Is there any sense in which MAC is exposed to the risk of foreign exchange rate

### Chemex, a U.S. maker of specialty chemicals, exports 40 percent of its \$600 million in annual sales

7. Chemex, a U.S. maker of specialty chemicals, exports 40 percent of its \$600 million in annual sales: 5 percent goes to Canada and 7 percent each to Japan, Britain, Germany, France, and Italy. It incurs all its costs in U.S. dollars, while most of its export sales are priced in the local currency. a. How is Chemex affected

### Nissan produces a car that sells in Japan for ¥1.8 million.

6. Nissan produces a car that sells in Japan for ¥1.8 million. On September 1, the beginning of the model year, the exchange rate is ¥150:\$1. Consequently, Nissan sets the U.S. sticker price at \$12,000. By October 1, the exchange rate has dropped to ¥125:\$1. Nissan is upset because it now receives only \$12,000 x 125 = ¥1.5 m