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    Exchange Rates

    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: Ecuadorian Sucre

    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 was t

    Exchange Rate Calculations

    Suppose the CFO of a German corporation with surplus cash flow has 1million Euros to invest. Suppose that interest rates on 1-year CD deposits in US banks are 2%, while rates on 1 year CD deposits denominated in Euros in German banks are currently 4.5%. Suppose further that the CFO expects that the (euro/$) exchange rate will i

    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

    IS-LM Curve Described and Graphed

    Please describe and explain graphically Within the IS-LM curve model, analyze the effect of an autonomous increase in saving that is matched by a drop in consumption, explain which curve would shift? Explain how would aggregate income level and interest rate level be affected.

    Defining Economic Terms

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