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Foreign Exchange Rates

Bid and ask cross rates, outright cross rates

8. As a foreign exchange trader at Sumitomo Bank, one of your customers would like a yen quote on Australian dollars. Current market rates are: Spot 30-day ¥101.37-85/U.S.$1 15-13 A$1.2924-44/U.S.$1 20-26 a. What bid and ask yen cro

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

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 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

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

Exchange rate: what was the foreign exchange loss incurred on the transaction?

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 International 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

French franc was the main target of speculators

The French franc was the main target of speculators during the August 1993 assault on the EMS despite the fact that France was running a 2% inflation rate while Germany had a 4.3% inflation rate. Why might this be?

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

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

Consequences of foreign exchange market intervention

In the late 1980s, the Bank of Japan bought billions of dollars in the foreign exchange market to prop up the dollar's value against the yen. What were the likely consequences of this foreign exchange market intervention for the Japanese economy?

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

Likely consequence of interest rate rise

In a widely anticipated move, on August 30, 1990, the Bank of Japan raised the discount rate (the rate it charges on loans to financial institutions) to 6% from 5.25% in a move to reduce inflationary pressures in Japan. Many currency traders had expected the Japanese central bank to raise its rate by more than 0.75%. What was th

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

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

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

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