ECON 305 Final Paper Ho Ming‚ Lo The Linked Exchange Rate System in Hong Kong On Nov 16‚ 2011‚ The IMF Staff Mission visited Hong Kong and showed endorsement on keeping the linked exchange rate in place (HKISD‚ 2011)‚ in spite of the voices of the abolition of the system‚ which causes adverse effects to the Hong Kong economy with monetary policies by the FED (Stephen‚ 2010). This system has been in function from the year 1983. It grants the HKD stability predictability and attracts foreign
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6.1 Risk Structure of Interest Rates 1) The risk structure of interest rates is A) the structure of how interest rates move over time. B) the relationship among interest rates of different bonds with the same maturity. C) the relationship among the term to maturity of different bonds. D) the relationship among interest rates on bonds with different maturities. 2) The risk that interest payments will not be made‚ or that the face value of a bond is
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Question 1 Consider an option on a non-dividend-paying stock when the stock price is $30‚ the exercise price is $29‚ the risk-free interest rate is 5% per annum‚ the volatility is 25% per annum‚ and the time to maturity is four months. a. What is the price of the option if it is a European call? b. What is the price of the option if it is an American call? c. What is the price of the option if it is a European put? d. Verify that put–call parity holds. Question 2 Assume that
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Exchange rates are the value of one currency with respect to another‚ for the purpose of conversion. They affect investment levels‚ via the cash rate and values of domestic assets; trades‚ via prices and the terms of trade (TOT); liabilities‚ via currency appreciation or depreciation and the valuation effect‚ and trades. Exchange rates are influenced by government policies in the short term and market forces in the long term. Since the Australian dollar (AUD) was floated in 1983 it has experienced
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exports as a way of providing jobs to Chinese workers and to attract Foreign Direct Investment (FDI) in order to gain access to technology and know-how. Yuan exchange rate regime could affect China’s economic growth also can through two aspects: the first is through the level changes‚ namely exchange rate appreciation and depreciation; the second is through the flexibility changes‚ namely the exchange rate fluctuation range expansion. Theoretically‚ the adjustment of Yuan exchange rate could impact
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is a fixed exchange rate system that fixes the exchange rate of Hong Kong Dollar and United State Dollar to a ratio of 7.8: 1 Hong Kong Monetary Authority does not need to stable exchange market by controlling the supply and demand of HKD. It can be stabilized by Fixed-linkage System. In the past 15 years‚ Hong Kong interest rates and exchange rates fluctuated in the same trend of the US interest rate and exchange rate. The graphs below show an example of interest rate and exchange rate respectively:
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Tiffany Case Study Introduction Tiffany was founded in September 18‚ 1837 and for about 170 years‚ the brand has been successfully opening several stores and establishing the brand as the top place to buy fine jewelry of high quality. The brand has been dedicated to provide their customers with original designs as well as the ultimate in-store experience. They know that their customers expect nothing less than top quality in jewelry and services and Tiffany’s has done just that for
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A New House—Risks and Benefits CheckPoint There are many different government bodies that can influence the national fiscal policy; but the three I feel are most important are the Federal Reserve System‚ the Legislative‚ and the Executive branches. The Fed controls the interest rate which in turn controls the mortgage rate which makes a difference on how much money you have to pay the bank back extra after paying back what was borrowed to purchase the house. The Federal Reserve changing the interest
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summary Tiffany and Company is one of the leading U.S. luxury jewelry brands‚ and their telltale “little blue box” has become a coveted item by women everywhere. Tiffany & Co. was founded in 1837 by Charles Tiffany and John Young and has grown to generate more then $2.6 billion in revenue through their 167 global retail outlets. The growth strategy that has seen them through their long reign is “growth without compromise”. In 2007‚ due to objections from their largest shareholder‚ Tiffany began looking
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AP Economics -- Exchange Rates Quiz -- Do Not Write On This Booklet!!! 1. U.S. export transactions create: A) a U.S. demand for foreign monies and the satisfaction of this demand decreases the supplies of dollars held by foreign banks. B) a U.S. demand for foreign monies and the satisfaction of this demand increases the supplies of dollars held by foreign banks. C) a foreign demand for dollars and the satisfaction of this demand decreases the supplies of foreign monies held by U.S. banks. D) a foreign
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