The 60-day forward rate for Japanese Yen is ¥130.75 per dollar. The spot rate is ¥135.56 per dollar. In 60 days you are expected to receive ¥2,500,000. If you agree to a forward contract how many dollars will you receive in 60 days?
$33,800
$18,442
$19,120
$32,688
The risk that a firm's value will fluctuate due to exchange rate movements is called:
transactions exposure.
political risk.
financial risk.
economic exposure.
A bond issued by a non-Japanese company in Japan and denominated in yen is called a(n):
Eurobond.
Yankee bond.
Bermuda bond.
Samurai bond.
The rate of inflation is predicted to be 3% in the US next year. If the current exchange rate is $1.9281/£ and the expected exchange rate for next year is $1.8914/£, what do you expect next year's rate of inflation in the UK to be if purchasing power parity holds?
5%
3%
2%
7%
The 60-day forward rate for Japanese Yen is ¥130.75 per dollar. The spot rate is ¥135.56 per dollar. You just received ¥2,500,000. If you exchange the amount today into dollars how many dollars will you receive?
$18,442
$33,800
$19,120
$32,688
You read the following spot and forward rates for the Euro in the newspaper:
What is the forward premium (discount) on the three months quote as an annual percentage rate?
4.024% premium
4.024% discount
1.006% premium
1.006% discount
Suppose that the real rate of return in the US is 9% and inflation is expected to be at 7%. In Australia the real interest rate is 15%. What is the expected rate of inflation in Australia if the Fisher Effect holds?
1.42%
5.84%
9.42%
12.89%
The theory that says that the identical good trading in different markets must sell at the same price is called the:
interest parity theory.
law of one price.
covered interest arbitrage theory.
none of the above.
You buy a pair of jeans in New York City for $35. If the same pair of jeans retails in London for £16.50, what has to be the £/$ exchange rate if the law of one price holds?
£0.5869/$
£2.1212/$
£2.3421/$
£0.4714/$
If the Euro-Dollar exchange rate is €0.7576/$ and the Dollar-Yen exchange rate is ¥105.55/$, what is the Yen-Euro exchange rate?