Question 1: The following table summarizes a country's current account in a given year.
|
|
Millions of US dollars
|
|
Goods: exports
|
50,000
|
|
Goods: imports
|
60,000
|
|
|
|
|
Services: credit
|
20,000
|
|
Services: debit
|
17,000
|
|
|
|
|
Income: credit
|
6,000
|
|
Income: debit
|
10,000
|
|
|
|
|
Current transfers: credit
|
2,000
|
|
Current transfers: debit
|
3,000
|
What is the balance of trade of this country?
$-50,000
$-10,000
$10,000
$50,000
$75,000
Question 2: Based on the information given in the previous problem, what is the balance on goods and services of this country?
$-45,000
$-7,000
$13,000
$45,000
$63,000
Question 3: Based on the information given in the previous problem, what is the balance on current account of this country?
$-52,000
$-45,000
$-12,000
$-5,000
$25,000
Question 4: The following table summarizes a country's balance of payments. Answer the next 2 questions based on the information.
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|
Billions of US dollars
|
|
Current account balance
|
-200
|
|
Capital account balance
|
5
|
|
Financial account balance
|
150
|
|
Net errors and omissions
|
7
|
|
Reserves and related items
|
38
|
Is this country experiencing a net capital inflow or outflow? By how much?
outflow by $300
outflow by $215
outflow by $155
inflow by $215
inflow by $575
Question 5: Has this country's official reserve increased or decreased? By how much?
increase by $18
increase by $25
increase by $30
decrease by $38
decrease by $45
Question 6: Suppose the following information is available for a country in a given year.
|
|
Billions of US dollars
|
|
S (Private Savings)
|
$1400
|
|
I (Private Domestic Investment)
|
$800
|
|
G (Government Spending)
|
$900
|
|
T (Tax Revenues)
|
$600
|
How much is the budget deficit of the country?
$-400billion
$-200billion
$200billion
$300 billion
$500billion
Question 7: How much is the current account balance of the country?
$-400billion
$-200billion
$200billion
$300 billion
$500billion
Question 8: What is the percentage of the domestic savings that were used to support the net exports?
20%
25%
40%
45%
50%
Question 9: The following information holds for the next three problems:
The $/£ bid and ask prices are $1.72 and $1.74, respectively.
What is the corresponding £/$ bid price?
0.5713
0.5747
0.5792
0.5867
0.5882
Question 10: If you want to change $1,000 into pound, how much would you get?
£571.33
£574.71
£579.23
£586.67
£588.24
Question 11: If you want to sell £1,000, how much dollars would you get?
$1,500
$1,700
$1,720
$1,740
$1,780
Question 12: The SF/$ spot exchange rate is 1.20 and the AUD/$ is 1.1. What is the SF/AUD cross exchange rate?
0.8
1.09
1.21
1.33
1.45
Question 13: Suppose the foreign exchange rate between the dollar and Swiss franc is shown as follows:
|
S($/SF) = .6012
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F30($/SF) = .5997
|
The spot rate in 30 days turns out to be .5993. What is the profit (loss) from a short position in a forward contract to sell SF1,000,000?
$1,600 loss
$2,200 loss
$400 profit
$1,000 profit
Question 14: Assume the following prices for the next two questions:
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|
American Terms ($/£) ($/€)
|
European Terms(£/$) (€/$)
|
|
|
Bid
|
Ask
|
Bid
|
Ask
|
|
British Pound (£)
|
1.4578
|
1.4633
|
0.6834
|
0.6860
|
|
Euro (€)
|
1.0812
|
1.0834
|
0.9230
|
0.9249
|
If a customer wants to sell £1,000,000 for €, how much € will he get?
€1,052,776
€1,133,677
€1,243,633
€1,345,579
Question 15: If a customer wants to sell €1,000,000 for £, how much £ will he get?
£738,892
£748,333
£777,633
£852,347
Question 16: Assume the following prices for the next four questions:
The SF/$ spot exchange rate is 1.70, and the CD/$ spot rate is 1.2 and the SF/CD 1.25. Suppose you have $1,000,000. To engage in the triangular arbitrage, you follow the next steps.
How much SF can you buy with the $1,000,000?
SF1,200,000
SF 1,500,000
SF 1,700,000
SF 2,000,000
Question 17: How much CD can you buy with the SF from the above transaction?
CD916,031
CD1,145,038
CD1,297,710
CD 1,360,000
Question 18: How much $ can you buy with the CD from the previous transaction?
$1,073,157
$1,081,425
$1,099,237
$1,133,333
Question 19: How much profit can you make from these transactions?
$73,157
$81,425
$99,237
$133,333
Question 20: The following information holds for the next four problems:
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|
Yen (¥/$)
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Pound ($/£)
|
|
|
Mid
|
bid
|
ask
|
mid
|
bid
|
ask
|
|
Spot
|
114.25
|
114.2
|
114.3
|
1.6525
|
1.6523
|
1.6527
|
|
forward-1m
|
114.02
|
-24
|
-22
|
1.6500
|
-26
|
-24
|
|
forward-6m
|
112.10
|
-220
|
-210
|
1.6368
|
-160
|
-154
|
|
swap-2yr
|
102.03
|
-1232
|
-1212
|
1.6291
|
-238
|
-230
|
|
swap-3yr
|
99.88
|
-1452
|
-1422
|
1.6266
|
-265
|
-253
|
The current spot rate of dollars per pound as quoted in a newspaper is ________ or ________.
£1.6525/$; $0.6051/£
$1.6525£; £0.6125/$
$1.6525/£; £0.6051/$
£1.6523/$; $0.6125/£
Question 21: The six-month forward bid price for dollars as denominated in Japanese yen is ________.
¥220/$
¥112.0/$
¥113.21/$
¥113.52/$
Question 22: The ask price for the three-year swap for a British pound is ___________.
$1.6274/£
$1.6292/£
$1.6315/£
$253/£
Question 23: According to the information provided in the table, the 1-month yen is selling at a forward ________ of approximately ________ per annum. (Use the mid rates to make your calculations.)
premium; 1.05%
premium; 2.42%
discount; 2.33%
discount; 3.25%
Question 24: The spot Singapore dollar is quoted bid S$1.6100/US$ and ask S$1.6150/US$. What is the direct quote in the United States to the nearest 4 decimal points?
US$0.6185/S$ bid, US$0.6192/S$ ask
S$1.6100/US$ bid, S$1.6150/US$ ask
US$0.6192/S$ bid, US$0.6211/S$ ask
S$1.6150/US$ bid, S$1.6165/US$ ask
Question 25: The following information holds for the next two problems:
The SF/$ spot exchange rate is 1.25 and the 180 forward exchange rate is 1.15.
What is the forward premium (discount) of the dollar against SF for delivery in 180 days?
11.0% premium
14.75% premium
11.0% discount
16.0% discount
18.0% discount
Question 26: Continuation of the previous problem:
The SF/$ spot exchange rate is 1.25 and the 180 forward exchange rate is 1.15.
What is the forward premium (discount) of SF against the dollar SF delivery in 180 days?
12.35% premium
16.25% premium
17.39% premium
12.35% discount
16.25% discount
Question 27: If according to the law of one price the current exchange rate of dollars per British pound is $1.43/£, then at an exchange rate of $1.5/£, the pound is over/under-valued by _________%.
undervalued by 2.3%
undervalued by 4.9%
overvalued by 2.3%
overvalued by 4.9%
overvalued by 6.33%
Question 28: One year ago the spot rate of U.S. dollars for Canadian dollars was $1.2/C$. Since that time the rate of inflation in the U.S. has been 4% lower than that in Canada. Based on the theory of Relative PPP, the current spot exchange rate of U.S. dollars for Canadian dollars should be approximately ____.
$0.95/C$
$1.05/C$
$1.15/C$
$1.20/C$
$1.25/C$
Question 29: The following information holds for the next three problems:
Sony of Japan produces LCD monitors and exports them to the United States. Last year the exchange rate was 120¥/$ and Sony charged $150 per LCD monitor. Currently the spot exchange rate is 110¥/$ and Sony is charging $160 per LCD monitor.
What is the rate of appreciation of the Japanese yen when the exchange rate changed from 120¥/$ to 110¥/$.
9.09%
10.52%
15.2%
17.25%
19.35%
Question 30: What is the implied exchange rate that was applied when Sony is charging $160 per LCD monitor? Assume the yen cost of a LCD monitor stays the same.
¥100/$
¥105/$
¥112.5/$
¥115/$
¥120/$
Question 31: What is the degree of pass through by Sony of Japan on their LCD monitors?
23.33%
25%
42.15%
52.5%
73.33%
Question 32: The following information holds for the next three problems:
Suppose that the annual interest rate is 5% in the US and 3% in Germany, and that the spot exchange rate is $1.2/euro and the forward exchange rate, with one-year maturity, is $1.25/euro. Assume that an arbitrager can borrow up to $2,000,000 and taking a covered interest arbitrage position.
If the arbitrager borrows $2,000,000, converts in into euro and invest in the German market, how much euro will she have at the end of the year?
1,526,667
1,633,333
1,666,667
1,716,667
1,945,667
Question 33: How much is the net profit in dollar in one year based on the covered interest arbitrage?
$45,833
$131,667
$145,333
$167,667
$233,333
Question 34: If an equilibrium with no arbitrage opportunities is to be restored, what should be the US interest rate? (Assume all the other numbers remain the same.)
6.35%
7.29%
8.33%
9.25%
10.33%
Question 35: If the annual interest rate is 4% in the US and 2% in Germany, then $ is expected to ____ against euro by ______%.
appreciate, 2%
appreciate, 3%
appreciate, 4%
depreciate, 2%
depreciate, 3%
Question 36: The following information holds for the next two problems:
Suppose that a Big Mac costs $3.00 in the US and 300 yen in Japan today. If the actual exchange rate is yen110/$ in the market.
How much is the Big Mac PPP exchange rate?
¥100/$
¥105/$
¥112.5/$
¥115/$
¥120/$
Question 37: According to the Big Mac prices, the Japanese yen is over/under valued compared to US $ by ____%.
undervalued by 6.33%
undervalued by 9.09%
overvalued by 2.56%
overvalued by 4.76%
overvalued by 8.56%
Question 38: Suppose the inflation is expected to be 2% in the US and 1% in the UK in the next year. Then, US dollar is expected to _________________ against British pound.
depreciate by 2%
depreciate by 3%
appreciate by 1%
appreciate by 2%
appreciate by 3%
Question 39: Suppose the inflation is expected to be 12% in Brazil and 2% in the US in the next year. Suppose today's exchange rate between the Brazilian real and US dollar is R3/$. What would you forecast the exchange rate to be one year from today?
R2.36/$
R2.67/$
R3.30/$
R3.63/$
R4.33/$
Question 40: The following information holds for the next two problems:
Suppose that on January 1 a firm in Mexico borrows $20 million from Citibank (USA) for one year at 6.00% interest per annum (bullet repayment of principal). During the year U.S. inflation is 2.00% and Mexican inflation is 12.00%. The loan was taken when the spot rate was Peso 3.40/US$. At the end of the one year loan period the exchange rate was Peso 4.80/US$
How much does the firm have to pay back in the Mexican peso one year later?
77.34million
83.52million
93.05million
101.76million
105.57million
Question 41: What is the cost to the firm of the loan in Mexican peso's (percent)?
23.33%
30.94%
34.57%
42.33%
49.65%
Question 42: Howard borrows ¥5,000,000 for 6 months at an annual rate of .50% and uses the proceeds to invest in the U.S. money market at an annual rate of 5.00%. If the spot rate today is ¥115/$ and the spot rate in 6 months is ¥110/$ Howard's net profit will be ____.
¥-110,326
¥-95,469
¥-67,333
¥23,333
¥67,333
Attachment:- Assignment.rar