Share
Explore BrainMass

Exchange Rates

Monetary Policy

I understand that monetary policy is an important tool of the federal reserve to regulate the interest rates and money supply which impacts the currency movement. It is also my understanding that the economy can adjust itself. Is it the fact that the economic adjustment takes too long? There must be a reason why the US does not

Basic Macroeconomics question

Consider a group of open economies; assume perfect capital mobility; (a) Assume there is a Leader country. All other countries (referred to as the Follower countries) fix their exchange rates vis-à -vis the Leader country. Discuss the effectiveness of monetary policy in the Follower countries. (b) If the Leader country r

International Monetary Economics PPP

Suppose that on January 1, 1999 the spot exchange rate was Yen/£=198. Over the year, the British inflation rate was 4%, and the Japanese inflation rate was 6%. i. What is the value of the spot rate (Yen/£) on December 31, 1999 implied by the relative PPP condition? ii. If the spot rate was Yen/£= 206 on December 31, 1

Foreign Exchange Rates and portfolio adjustments

This question regards international finance specifically the asset market model and exchange rates. Assume the spot exchange rate between dollars and yen is e=$1/100yen. The interest rate on a 180 day dollar denominated assets is i($)=1% and the interest rate on comparable 180 day yen denominated assets is also i(yen)= 1%. T

financing a Brazilian business operation

As a seller of information to customers in Brazil, you are an exporter and you periodically purchase advertising space on Brazilian Web sites to advertise your service; therefore are an importer of a service. If you could not afford to pay for the advertising space in advance, you might finance your purchases of Brazilian advert

A)what would you receive in USD if you sold YEN 300,000,000 spot? b)what would it cost you to purchase YEN 400,000,000 forward 3M with USD? When would you make payment for the forward transaction? c) Using mid rates, calculate the yield on Japanese 6M bills.

A FX dealer in London normally quotes spot, 1M, 3M and 6M forward. When you ask over the phone for current quotes for YEN/USD you hear "111.43 to 51, 52 to 48, 150 to 144, 337 to 205" a)what would you receive in USD if you sold YEN 300,000,000 spot? b)what would it cost you to purchase YEN 400,000,000 forward 3M with USD? Whe

Nominal exchange rates, relative PPP , real exchange rate

One year ago Polish zloty was PLN 3.8000/USD. Since then the sloty has fallen 14% against the dollar. Price levels in the US have not changed, but Polish price has gone up 7% -what is the nominal exchange rate today? -what should be the exchange rate today, based on relative PPP and assuming last year was normal? -Did the z

Current state of the NHL

What is the current state of the NHL? Why is there a lockout? Is it to do with revenues? Salary Caps? High player salaries? Too many unprofitable teams? Low ratings, low attendance? Revenue Sharing? The tv deals? Thanks!

Currency conversion and Effect of currency depreciation

Problem : One type of toy bears is in China and exported to the US. A toy bear sells for 16 Yen in China. The exchange rate of Chinese yen and US dollars is $1 = 8 Yen. a. what will be the price of this toy bear in US dollars? b. Suppose the US demand for this toy bear is D = 100- 10*P. P is the price in US dolla

Foreign Exchange Rates

In 1998, the Russian ruble depreciated 54% against the Deutschmark. How much did the Deutschmark appreciate against the Ruble?

Foreign Exchange Rates

When I was in Mexico in 1998, the hotel room costs MP950 per night. Today the same room costs MP1050. During the same period the exchange rate went from MP12.56/$ to MP 8.9340/$.

Foreign Exchange Rates

The Ecuadorian Sucre is trading for $0.000425 today and you are redeeming an Ecuadorian one-year bill that you purchased one year ago when the Sucre was at $0.0005. Calculate the U.S. dollar rate of return on this Ecuadorian one-year bill if you purchased it for 8,000,000 Sucre and will redeem it for 10,000,000 Sucre. What w

How do I solve this using this formula?

Given: The Spot Exchange Rate (R) between the British Pound and the Japanese Yen is Y190.00/L The Six Month foward rate (F) is Y199.0476/L British six-month government bonds offer an interest rate of 5% Assuming that the global finaincial markets are perfectly efficent, what interest rate should Japanese six-month g

Foreign Exchange

· On Friday, the New York foreign currency market closed with a quote of $1.0900 / Euro. To stimulate economic activity the Federal Reserve hints that interest rates will be lowered by 50 basis points (½ of 1%). At the close of business on Monday, reacting to speculation that the Fed will lower interest rates, the New York c

Theory of relative purchasing power parity is applied.

Assume that the inflation rate in the U.S. and japan are 4% and 2% , respectively and that the current spot rate is $.0083333 per Japanese yen or 120 Japanesse yen per one U.S. dollar. How much should the U.S. dollar depreciate in order to maintain purchasing power parity?

Some basic definitions of economics

Opportunity Cost,Inflation,Unemployment,The balance of payments,Managed floating exchange rates,The real after-tax yield on investment,Economies of scale,Economies of scope,Profit maximization,Consumer Surplus, Nash Equilibrium, Perfect competition, Monopoly,Prisoners Dilemma

Write the following National Income Model in the form Ax = b and solve using Cramer's Rule: C=α+βY I=γ+θr Y=C+I Where income(Y), consumption(C) and investment(I) are endogenous; the rate of interest(r) is exogenous and α, β, γ and θ are known constants. Also find the slope of t

Working with the interest parity condition

Would the interest parity condition change if all foreign exchange transactions were subject to a 1% transaction fee? If not, explain why. If yes, explain how you would drive the new interest parity condition. When would an investor prefer this type of transaction fee to one in which they paid a flat fee for each foreign exchang

Defining Economic Terms

Define and discuss - Stagflation - Real and nominal variables - Marginal productivity theory of distribution - Business cycle