国际金融Chapter

Chapter4 Answer C 0 73 0 69 0 69 5 80 1 ThevalueoftheAustraliandollar A todayis 0 73 Yesterday thevalueoftheAustraliandollarwas 0 69 TheAustraliandollar by A depreciated 5 80B depreciated 4 00C appreciated 5 80D appreciated 4 00 Answer C 2 Ifacurrency sspotratemarketis itsexchangerateislikelytobe toasinglelargepurchaseorsaletransaction A liquid highlysensitiveB illiquid insensitiveC illiquid highlysensitiveD noneofthese Answer E 3 isnotafactorthatcausescurrencysupplyanddemandschedulestochange A RelativeinflationratesB RelativeinterestratesC RelativeincomelevelsD ExpectationsE Allofthesearefactorsthatcausecurrencysupplyanddemandschedulestochange Answer B 4 AlargeincreaseintheincomelevelinMexicoalongwithnogrowthintheU S incomelevelisnormallyexpectedtocause assumingnochangeininterestratesorotherfactors a n inMexicandemandforU S goods andtheMexicanpesoshould A increase appreciateB increase depreciateC decrease depreciateD decrease appreciate Answer A 5 AnincreaseinU S interestratesrelativetoGermaninterestrateswouldlikely theU S demandforeurosand thesupplyofeurosforsale A reduce increaseB increase reduceC reduce reduceD increase increase Answer E 6 BaylorBankbelievestheNewZealanddollarwillappreciateoverthenextfivedaysfrom 48to 50 Thefollowingannualinterestratesapply CurrencyLendingRateBorrowingRateDollars7 10 7 50 NewZealanddollar NZ 6 80 7 25 BaylorBankhasthecapacitytoborroweitherNZ 10millionor 5million IfBaylorBank sforecastifcorrect whatwillitsdollarprofitbefromspeculationoverthefivedayperiod assumingitdoesnotuseanyofitsexistingconsumerdepositstocapitalizeonitsexpectations Dailyinterestrateis1 360oftheannualrate A 521 325 B 500 520 C 104 262 D 413 419 E 208 044 1 Borrow 5million 2 ConverttoNZ 5 000 000 48 NZ 10 416 667 3 InvesttheNZ atanannualizedrateof6 80 overfivedays NZ 10 416 667 1 6 80 5 360 NZ 10 426 5054 ConverttheNZ backtodollars NZ 10 426 505 50 5 213 2525 Repaythedollarsborrowed Therepaymentamountis 5 000 000 1 7 5 5 360 5 000 000 1 00104 5 005 2086 Afterrepayingtheloan theremainingdollarprofitis 5 213 252 5 005 208 208 044 Answer A 7 AssumethefollowinginformationregardingU S andEuropeanannualizedinterestrates CurrencyLendingRateBorrowingRateU S Dollar 6 73 7 20 Euro 6 80 7 28 TrensorBankcanborroweither 20millionor 20million Thecurrentspotrateoftheeurois 1 13 Furthermore TrensorBankexpectsthespotrateoftheeurotobe 1 10in90days WhatisTrensorBank sdollarprofitfromspeculatingifthespotrateoftheeuroisindeed 1 10in90days A 579 845 B 583 800 C 588 200 D 584 245 E 980 245 SOLUTION Borrow 20million Convertthe 20millionto 20 000 000 1 13 22 600 000 Investthe 22 600 000atanannualizedrateof6 73 for90days 22 600 000 1 6 73 90 360 22 980 245Determineeurosowed 20 000 000 1 7 28 90 360 20 364 000 Determinedollarsneededtorepayeuroloan 20 364 000 1 10 22 400 400 Thedollarprofitis 22 980 245 22 400 400 579 845 Answer D 8 Theequilibriumexchangerateofpoundsis 1 70 Atanexchangerateof 1 72perpound A U S demandforpoundswouldexceedthesupplyofpoundsforsaleandtherewouldbeashortageofpoundsintheforeignexchangemarket B U S demandforpoundswouldbelessthanthesupplyofpoundsforsaleandtherewouldbeashortageofpoundsintheforeignexchangemarket C U S demandforpoundswouldexceedthesupplyofpoundsforsaleandtherewouldbeasurplusofpoundsintheforeignexchangemarket D U S demandforpoundswouldbelessthanthesupplyofpoundsforsaleandtherewouldbeasurplusofpoundsintheforeignexchangemarket E U S demandforpoundswouldbeequaltothesupplyofpoundsforsaleandtherewouldbeashortageofpoundsintheforeignexchangemarket Answer C 9 AssumethatSwissinvestorshavefrancsavailabletoinvestinsecurities andtheyinitiallyviewU S andBritishinterestratesasequallyattractive NowassumethatU S interestratesincreasewhileBritishinterestratesstaythesame Thiswouldlikelycause A theSwissdemandfordollarstodecreaseandthedollarwilldepreciateagainstthepound B theSwissdemandfordollarstoincreaseandthedollarwilldepreciateagainsttheSwissfranc C theSwissdemandfordollarstoincreaseandthedollarwillappreciateagainsttheSwissfranc D theSwissdemandfordollarstodecreaseandthedollarwillappreciateagainstthepound Answer C 10 Therealinterestrateadjuststhenominalinterestratefor A exchangeratemovements B incomegrowth C inflation D governmentcontrols E noneofthese Answer D 11 IfU S inflationsuddenlyincreasedwhileEuropeaninflationstayedthesame therewouldbe A anincreasedU S demandforeurosandanincreasedsupplyofeurosforsale B adecreasedU S demandforeurosandanincreasedsupplyofeurosforsale C adecreasedU S demandforeurosandadecreasedsupplyofeurosforsale D anincreasedU S demandforeurosandadecreasedsupplyofeurosforsale Answer A 12 IfinflationinNewZealandsuddenlyincreasedwhileU S inflationstayedthesame therewouldbe A aninwardshiftinthedemandscheduleforNZ andanoutwardshiftinthesupplyscheduleforNZ B anoutwardshiftinthedemandscheduleforNZ andaninwardshiftinthesupplyscheduleforNZ C anoutwardshiftinthedemandscheduleforNZ andanoutwardshiftinthesupplyscheduleforNZ D aninwardshiftinthedemandscheduleforNZ andaninwardshiftinthesupplyscheduleforNZ Answer D 13 IftheU S andJapanengageinsubstantialfinancialflowsbutlittletrade directlyinfluencetheirexchangeratethemost IftheU S andSwitzerlandengageinmuchtradebutlittlefinancialflows directlyinfluencetheirexchangeratethemost A interestratedifferentials interestratedifferentialsB inflationandinterestratedifferentials interestratedifferentialsC incomeandinterestratedifferentials inflationdifferentialsD interestratedifferentials inflationandincomedifferentialsE inflationandincomedifferentials interestratedifferentials Answer B 14 IfinflationincreasessubstantiallyinAustraliawhileU S inflationremainsunchanged thisisexpectedtoplace pressureonthevalueoftheAustraliandollarwithrespecttotheU S dollar A upwardB downwardC eitherupwardordownward dependingonthedegreeoftheincreaseinAustralianinflation D noneofthese therewillbenoimpact Answer C 15 AssumethatJapanplacesastrictquotaongoodsimportedfromtheU S andtheU S placesastrictquotaongoodsimportedfromJapan ThiseventshouldimmediatelycausetheU S demandforJapaneseyento andthesupplyofJapaneseyentobeexchangedforU S dollarsto A inc