Chapter 4 Exchange Rate Determination 1. The value of the Australian dollar (A$) today is $0.73. Yesterday‚ the value of the Australian dollar was $0.69. The Australian dollar _______ by _______%. A) depreciated; 5.80 B) depreciated; 4.00 C) appreciated; 5.80 D) appreciated; 4.00 ANSWER: C SOLUTION: ($0.73 – $0.69)/$0.69 = 5.80% 2. If a currency’s spot rate market is _______‚ its exchange rate is likely to be _______ to a single large purchase or sale
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4. Would any of the hedges you compared in question 2 for the British pounds to be received in 90 days require Blades to overhedge? Given Blades’ exporting arrangements‚ do you think it is subject to overhedging with a money market hedge? Since Ben Holt want to hedge all the exposure and there are 31‚250 pounds in a put option. However‚ Blades will receive 4‚000‚000 pounds in 90 days and it will need to purchase 128 put options to cover this exposure. In this case‚ none of the hedges would require
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INSTRUCTOR’S MANUAL: MULTINATIONAL FINANCIAL MANAGEMENT‚ 9TH ED. CHAPTER 7 SUGGESTED ANSWERS TO CHAPTER 7 QUESTIONS 1. Answer the following questions based on data in Exhibit 7.5. a. How many Swiss francs can you get for one dollar? ANSWER. The indirect quote is $1 = SFr 1.0534. b. How many dollars can you get for one Swiss franc? ANSWER. The direct quote is SFr1 = $0.9493. c. What is the three-month forward rate for the Swiss franc? ANSWER. The three-month forward
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be not considered. D) none of these. 4. Which of the following reflects a hedge of net receivables in British pounds by a U.S. firm? A) purchase a currency call option in British pounds. B) buy pounds forward. C) borrow U.S. dollars‚ convert them to pounds‚ and invest them in a British pound deposit. D) purchase a current put option in British pounds OR sell pounds forward 5. If Lazer Co. desired to lock in the maximum it would have to pay for its net payables in euros but wanted
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account in the amount of ____________. A. Debit‚ $500‚000 B. Credit‚ €512‚100 C. Credit‚ $500‚000 D. Debit‚ €512‚100 [pic] Spot Rate Quotations 29.5.16. Using the table shown‚ what is the most current spot exchange rate shown for British pounds? Use a direct quote from a U.S. perspective. A. $1.61 = ≤1.00 B. $1.60 = ≤1.00 C. $1.00 = ≤0.625 D. $1.72 = ≤1.00 30.5.17. Suppose that the current exchange rate is €0.80 = $1.00. The direct quote‚ from the U.S. perspective is A. €1.00 = $1
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of the pound Depending on how strong the UK pound is determines how well the country’s economy is; if the pound is strong this means the country is doing well and vice versa. However this also has an effect on the number of people that visit the UK‚ a strong pound actually deters overseas visitors due to them receiving fewer pounds when exchanging their own money as one UK pound is worth more than one of their currency. 2010 Exchange rates http://www.xe.com/ 25/11/10 When the pound is weak
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The taxation policies under the Global Financial Crisis in UK Outline of essay Introduction Since the beginning of 2008‚ because of the wake of the financial crisis‚ the global economy has been suffering the severe damage. In October 2008‚ the WORLD ECONOMIC OUTLOOK published by the International Monetary Fund (IMF) illustrated that suffering the financial crisis‚ the world economy was entering a serious period of downturn. While in the latest outlook in April 2013‚ it is illustrated that the environment
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Analysis Process: 1. Display program welcome message 2. Ask for item name 3. Ask for item price 4. Ask for pound weight 5. Ask for ounces 6. Convert pounds to ounces then add to input ounces 7. Divide total price by ounces 8. Display the price per ounce. Input: Item Name Item Price Item Weight in pounds Ounces as integer Output: Unit price Main Module Declare Name as String Declare Price as real Declare Lbs as integer Declare Oz as integer Declare UnitPrice
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healthy for the environment; it’s healthy for you‚ too. How many burgers do you eat in one week? Do you know that it takes 4.8 pounds of grain (fed to cattle) to produce one pound of ground beef? Do you know how many people can be fed with 4.8 pounds of grain? It takes 2‚500 to 6‚000 pounds of water to produce one pound of meat‚ but one pound of wheat can be grown with 60 pounds of water. Making small cutbacks (maybe one day per week) is not only better for our planet; it’s better for your body. (Lee
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which meant that I was going to need four pizzas. First‚ I needed to go to the store. I need to buy two boxes of Bisquick‚ four pounds of hamburger and four pounds of Italian sausage‚ four cans of large pitted olives; four cans of chunked pineapple packed in its own juice‚ four containers of sliced mushrooms‚ three‚ two pound blocks of cheddar cheese‚ and two‚ two pound blocks of mozzarella cheese. In addition‚ let us not forget the two gallons of milk to wash it all down. A person can use any
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