The Balance of Payments‚ Exchange Rates‚ and Trade Deficits REVIEW QUESTIONS 1. Do all international financial transactions necessarily involve exchanging one nation’s distinct currency for another? Explain. Could a nation that neither imports goods and services nor exports goods and services still engage in international financial transactions? Answer: The answer is almost certainly a yes. Only in rare cases would you find barter exchanges (goods and services for other goods and services)
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connected with the possibility of exchange rate fluctuations. The company’s prices are fixed in USD currency‚ and if for example pound appreciates against dollar‚ the company will face losses. Volume risk occurs because the sales are projected in advance‚ and the real sales can differ from the projected ones. This risk mainly has a certain attitude towards High School travel division‚ since its customers reacts immediately to the world cataclysms‚ currency exchange fluctuations‚ wars etc.
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its simplest form‚ the purchasing power parity exchange rate can be thought of as the level of the nominal exchange rate such that the purchasing power of a unit of currency is exactly the same in the foreign economy as in the domestic economy‚ once it is converted into foreign currency at that rate’. Taylor (2003‚ 437). If this is the case then there is no discrepancy in the price of two goods in two different countries indicating that the exchange rate is efficient and that there is no over or undervaluation
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Currently is the exchange rate between the German mark and French franc fixed? The first word of your answer should either be “yes” (it is fixed) or “no” (it is not fixed) and then explain your answer. 5pts 2.) Currently is the exchange rate between the German march and Japanese Yen fixed? The first word of your answer should be either "yes” (it is fixed) or “no” (it is not fixed) and then explain your answer. 5pts 3. How could country A use SDRs to intervene in the exchange rate market? What should
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the answer sheet on page 2 of this document Circle the answer you think is correct 1. The forecasted inflation rates for China and Australia are 3% and 5% respectively. The nominal interest rate or yield in the Australian Dollar market (one year sovereign debt) is 9% while the equivalent rate in China is 6%. The spot exchange rate is CNY 6.6807/Australia$. What is the spot exchange rate one year from now? A. CNY 6.5534/Australia$ B. CNY 6.3256/Australia$ C. CNY 5.9868/Australia$ D. CNY 7.1354/Australia$
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Regardless‚ the problems have already arisen and it was mentioned that the Bolivar (Bs) was doing horribly against the United States dollar (USD). Given that relationship‚ businesses in Venezuela who rely on the USD and use the Bs as a means of exchange would tend to perform terribly. In this case‚ Santiago owns a pharmaceutical distribution business whose suppliers are based in the United States. This is an assumption because it simply mentions that he is importing for his business and that he
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5:30 - 7:00 p.m. and by appointment Telephone: 941-7577 and 941-4048 e-mail: ioannis.kallianiotis@scranton.edu Required Text: (I) Exchange Rate and International Financial Economics‚ by John N. Kallianiotis‚ Palgrave MacMillan‚ N.Y.‚ 2013 (II) International Financial Transactions and Exchange Rates‚ by John N. Kallianiotis‚ Palgrave MacMillan‚ New York‚ 2013 Suggested Books: 1. Balance of Payments Adjustment: Macro Facets of International Finance Revisited
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5 2.1 Exchange rate analysis 5 2.2 The nominal effective exchange rate 6 2.3 The real effective exchange rate 6 3. METHODOLOGY 6 3.1 Methods of Data Collection 6 3.2 Methods of Data Analysis 6 3.2.1 Factors affecting balance of payments 6 RESEARCH BUDGET 8 TENTATIVE TIMEBLE 10 REFERENCES 11 1. INTRODUCTION 1.1. Background Information In most economies that are termed as small and open‚ the Central Bank targets the value of the nominal exchange rate by intervening
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| Comparison of Interest rate differentials to exchange rate movement for Indian Rupee vis-a`-vis US Dollar | ICF | | | | | Introduction 4 Literature Review 5 Interest Rate Parity 6 Methodology 10 Data 10 Spot Exchange Rate Data: 10 Forward Rate Data: 10 Interest Rate Data for India: 11 Interest Rate Data for US: 11 Analysis and Discussion 11 Deviations from Interest Rate Parity (DIRP): 11 One Month Forwards: 11 3 Month Forwards: 13 6 Month Forwards: 14 9 Month Forwards:
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10‚000‚000 Micca’s cost of capital (WACC) 12% Spot exchange rate‚ cedis/$ 1.90 Six-month forward rate‚ cedis/$ 1.95 Expected spot exchange rate in 6 months‚ cedis/$ 2.00 Options on Ghanaian cedis: Call Option Put Option Strike price‚ cedis/$ 2.00 2.00 Option premium (percent) 2.00% 3.00% United States Ghana Six-month interest rate for borrowing (per annum) 4.00% 8.00% Six-month interest rate for investing (per annum) 2.00% 6.00% (a) If the company
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