Problem Set 2 International Finance Shrikhande Fall 2006 SUGGESTED SOLUTIONS TO CHAPTER 4 PROBLEMS 1. From base price levels of 100 in 1987‚ West German and U.S. price levels in 1988 stood at 102 and 106‚ respectively. If the 1987 $/DM exchange rate was $0.54‚ what should the exchange rate be in 1988? In fact‚ the exchange rate in 1988 was DM 1 = $0.56. What might account for the discrepancy? (Price levels were measured using the consumer price index.) Answer. If e1981 is the dollar
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3209AFE INTERNATIONAL FINANCE Tutorial 4 Questions Chapter 10 2. Assessing Transaction Exposure. (Page 331) Your employer‚ a large MNC‚ has asked you to assess its transaction exposure. Its projected cash flows are as follows for the next year: | | | |Current Exchange Rate in U.S. | |Currency |Total Inflow |Total Outflow |Dollars |
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dollar could enlarge the U.S. balance of trade deficit. Explain why a weaker dollar could affect the U.S. balance of trade deficit. A. A stronger dollar makes U.S. goods less attractive to foreign importers due to expensive price to purchase and it may reduce U.S. exports. The other way‚ U.S. imports will be more attractive to U.S. exporters due to cheap price to purchase foreign goods and may increase U.S. imports. And this trade imbalance will result trade deficit. And a weaker home currency increases
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Current Balance of Payment Situation of Bangladesh: The economic performance of a country is reflected in its balance of payment (BoP) The balance of payment (BOP) refers to a method countries use to monitor all international monetary transactions at a specific period of time. Usually‚ the BOP is calculated every quarter and every calendar year. All trades conducted by both the private and public sectors are accounted for in the BOP in order to determine how much money is going in and out of
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International Trade Homework #2 (Chapter 5) Plus the Articles from the online Packet Article: “End of Bumpy Road” 1. Based on what we have read in Ch 5‚ discuss the effects of Korea’s agricultural policies on trade. 2. The very last sentence mentions “real market prices”. What is meant by this? 3. How much impact do Korean agricultural policies have on the prices in question 2? Explain. Chapter 5 1. Assume that Norway and Sweden trade with each other‚ with Norway exporting fish to
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Islamic Trade Finance Presented by Jamaliah Abd Malik Objective • At the end of this session‚ the participants will be able to • List down the trade finance-i products available • Explain briefly the concept applicable Contents • • • • • Introduction • What is trade • Method of payments Summary of products available with banks Letter of credit-i Trust receipt-i Letter of Guarantee-i Contents- contd • • • • • Shipping-i Accepted Bills-I Bills Purchased-i
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Modern non-tariff measures 1. Import deposit schemes: this requires importers to deposit a certain amount with the central bank of the country. This makes importing more time consuming and more expensive and reduces the liquidity of the importing firm. 2. Voluntary Export Restrain (VER): it is an agreement between two countries where the government of exporting country agrees voluntary to restrict the volume of its exports of a certain good. Ex. Japan’s VER with USA in the export of motor
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sale‚ and (c) equilibrium value of th Canadian dollar? f the C di d ll ? Assuming no effect on U.S. interest rates‚ demand for dollars should increase‚ Supply of dollars for sale may not be affected‚ and The dollar’s value should increase. Trade Restriction Effects on Exchange Rates • Assume that the Japanese government relaxes its controls on imports by Japanese companies. Other things being equal‚ how should this affect the (a) U.S. demand for Japanese yen‚ (b) supply of yen for sale‚ and
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depreciate against US dollar‚ and this can be caused because of the rising inflation which decrease the BDT value. In the month of November the inflation rate was 7.15% which was increased from the last month October which having Inflation of 7.03%. (Bangladesh Beauro of Statistica) Where the AUD appreciate against USD‚ and possible
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PREFACE Nowadays‚ the International Payment activity in the banking service plays a more and more important role in the external economics affair. It provides a useful tool for connecting external economics affairs‚ economic and commercial relationship among the countries all over the world. The International Payment activity is one of the important activities of the banks and relates to many other kind of banking services. Vietcombank in general and Vietcombank Hanoi in particular
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