国际金融Chapter 4

Chapter4,Answer:C($0.73$0.69)/$0.69=5.80%,1.ThevalueoftheAustraliandollar(A$)todayis$0.73.Yesterday,thevalueoftheAustraliandollarwas$0.69.TheAustraliandollar_by_%.A)depreciated;5.80B)depreciated;4.00C)appreciated;5.80D)appreciated;4.00,Answer:C,2.Ifacurrencysspotratemarketis_,itsexchangerateislikelytobe_toasinglelargepurchaseorsaletransaction.A)liquid;highlysensitiveB)illiquid;insensitiveC)illiquid;highlysensitiveD)noneofthese,Answer:E,3._isnotafactorthatcausescurrencysupplyanddemandschedulestochange.A)RelativeinflationratesB)RelativeinterestratesC)RelativeincomelevelsD)ExpectationsE)Allofthesearefactorsthatcausecurrencysupplyanddemandschedulestochange.,Answer:B,4.AlargeincreaseintheincomelevelinMexicoalongwithnogrowthintheU.S.incomelevelisnormallyexpectedtocause(assumingnochangeininterestratesorotherfactors)a(n)_inMexicandemandforU.S.goods,andtheMexicanpesoshould_.A)increase;appreciateB)increase;depreciateC)decrease;depreciateD)decrease;appreciate,Answer:A,5.AnincreaseinU.S.interestratesrelativetoGermaninterestrateswouldlikely_theU.S.demandforeurosand_thesupplyofeurosforsale.A)reduce;increaseB)increase;reduceC)reduce;reduceD)increase;increase,Answer:E,6.BaylorBankbelievestheNewZealanddollarwillappreciateoverthenextfivedaysfrom$.48to$.50.Thefollowingannualinterestratesapply:CurrencyLendingRateBorrowingRateDollars7.10%7.50%NewZealanddollar(NZ$)6.80%7.25%BaylorBankhasthecapacitytoborroweitherNZ$10millionor$5million.IfBaylorBanksforecastifcorrect,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$10,416,6671+6.80%(5/360)=NZ$10,426,5054.ConverttheNZ$backtodollars:NZ$10,426,505$.50=$5,213,2525.Repaythedollarsborrowed.Therepaymentamountis:$5,000,0001+7.5%(5/360)=$5,000,0001.00104=$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$20millionor20million.Thecurrentspotrateoftheeurois$1.13.Furthermore,TrensorBankexpectsthespotrateoftheeurotobe$1.10in90days.WhatisTrensorBanksdollarprofitfromspeculatingifthespotrateoftheeuroisindeed$1.10in90days?A)$579,845.B)$583,800.C)$588,200.D)$584,245.E)$980,245.,SOLUTION:,Borrow20million.Convertthe20millionto20,000,000$1.13=$22,600,000.Investthe$22,600,000atanannualizedrateof6.73%for90days.$22,600,0001+6.73%(90/360)=$22,980,245Determineeurosowed:20,000,0001+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)