Finance 534 week 11 quiz 10\t\u00a0\t \ufffd \ufffd\u00a0 Question 1\t\u00a0\t \ufffd \ufffd\u00a0\t \ufffd \ufffd\u00a0 Suppose DeGraw Corporation, a U.S. exporter, sold a solar heating station to a Japanese customer at a price of 143.5 million yen, when the exchange rate was 140 yen per dollar.\u00a0 In order to close the sale, DeGraw agreed to make the bill payable in yen, thus agreeing to take some exchange rate risk for the transaction.\u00a0 The terms were net 6 months.\u00a0 If the yen fell against the dollar such that one dollar would buy 154.4 yen when the invoice was paid, what dollar amount would DeGraw actually receive after it exchanged yen for U.S. dollars?\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t \ufffd \ufffd\u00a0 \u00a0Question 2\t\u00a0\t \ufffd \ufffd\u00a0\t \ufffd \ufffd\u00a0 Suppose 144 yen could be purchased in the foreign exchange market for one U.S. dollar today.\u00a0 If the yen depreciates by 8.0% tomorrow, how many yen could one U.S. dollar buy tomorrow?\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t \ufffd \ufffd\u00a0 \u00a0Question 3\t\u00a0\t \ufffd \ufffd\u00a0\t \ufffd \ufffd\u00a0 Suppose one British pound can purchase 1.82 U.S. dollars today in the foreign exchange market, and currency forecasters predict that the U.S. dollar will depreciate by 12.0% against the pound over the next 30 days. How many dollars will a pound buy in 30 days?\tAnswer \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0\u00a0\t\u00a0\t \ufffd \ufffd\u00a0 \u00a0Question 4\t\u00a0\t \ufffd \ufffd\u00a0\t \ufffd \ufffd\u00a0 Suppose 6 months ago a Swiss investor bought a 6-month U.S. Treasury bill at a price of $9,708.74, with a maturity value of $10,000.\u00a0 The exchange rate at that time was 1.420 Swiss francs per dollar.\u00a0 Today, at maturity, the exchange rate is 1.324 Swiss francs per dollar.\u00a0 What is the annualized rate of return to the Swiss investor?\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t“\ufffd \ufffd \ufffd Question 5\t\u00a0\t \ufffd \ufffd\u00a0\t \ufffd \ufffd\u00a0 A box of candy costs 28.80 Swiss francs in Switzerland and $20 in the United States.\u00a0 Assuming that purchasing power parity (PPP) holds, what is the current exchange rate?\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t“\ufffd \ufffd \ufffd Question 6\t\u00a0\t \ufffd \ufffd\u00a0\t \ufffd \ufffd\u00a0 Suppose one year ago, Hein Company had inventory in Britain valued at 240,000 pounds.\u00a0 The exchange rate for dollars to pounds was 1\u00a3 = 2 U.S. dollars.\u00a0 This year the exchange rate is 1\u00a3 = 1.82 U.S. dollars.\u00a0 The inventory in Britain is still valued at 240,000 pounds.\u00a0 What is the gain or loss in inventory value in U.S. dollars as a result of the change in exchange rates?\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0\t \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0\t“\ufffd \ufffd \ufffd Question 7\t\u00a0\t \ufffd \ufffd\u00a0\t \ufffd \ufffd\u00a0 Which of the following is NOT a reason why companies move into international operations?\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t\u00a0\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t“\ufffd \ufffd \ufffd Question 8\t\u00a0\t \ufffd \ufffd\u00a0\t \ufffd \ufffd\u00a0 If one U.S. dollar buys 1.64 Canadian dollars, how many U.S. dollars can you purchase for one Canadian dollar?\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t“\ufffd \ufffd \ufffd Question 9\t\u00a0\t \ufffd \ufffd\u00a0\t \ufffd \ufffd\u00a0 If the inflation rate in the United States is greater than the inflation rate in Britain, other things held constant, the British pound will\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t“\ufffd \ufffd \ufffd Question 10\t\u00a0\t \ufffd \ufffd\u00a0\t \ufffd \ufffd\u00a0 In 1985, a given Japanese imported automobile sold for 1,476,000 yen, or $8,200.\u00a0 If the car still sold for the same amount of yen today but the current exchange rate is 144 yen per dollar, what would the car be selling for today in U.S. dollars?\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t\u00a0\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t“\ufffd \ufffd \ufffd Question 11\t\u00a0\t \ufffd \ufffd\u00a0\t \ufffd \ufffd\u00a0 Suppose the exchange rate between U.S. dollars and Swiss francs is SF 1.41 = $1.00, and the exchange rate between the U.S. dollar and the euro is $1.00 = 1.64 euros.\u00a0 What is the cross-rate of Swiss francs to euros?\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0\t“\ufffd \ufffd \ufffd Question 12\t\u00a0\t \ufffd \ufffd\u00a0\t \ufffd \ufffd\u00a0 Suppose hockey skates sell in Canada for 105 Canadian dollars, and 1 Canadian dollar equals 0.71 U.S. dollars.\u00a0 If purchasing power parity (PPP) holds, what is the price of hockey skates in the United States?\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t“\ufffd \ufffd \ufffd Question 13\t\u00a0\t \ufffd \ufffd\u00a0\t \ufffd \ufffd\u00a0 If one Swiss franc can purchase $0.71 U.S. dollars, how many Swiss francs can one U.S. dollar buy?\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t“\ufffd \ufffd \ufffd Question 14\t2 out of 2 points\t \ufffd \ufffd\u00a0\t \ufffd \ufffd\u00a0 Suppose 90-day investments in Britain have a 6% annualized return and a 1.5% quarterly (90-day) return.\u00a0 In the U.S., 90-day investments of similar risk have a 4% annualized return and a 1% quarterly (90-day) return.\u00a0 In the 90-day forward market, 1 British pound equals $1.65.\u00a0 If interest rate parity holds, what is the spot exchange rate?\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t \ufffd \ufffd \ufffd \ufffd\u00a0\u00a0\u00a0\t \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd \ufffd\t“\ufffd \ufffd \ufffd Question 15\t\u00a0\t \ufffd \ufffd\u00a0\t \ufffd \ufffd\u00a0 Which of the following statements is NOT CORRECT?<\/p>\n","protected":false},"excerpt":{"rendered":"
Finance 534 week 11 quiz 10 \u00a0 \ufffd \ufffd\u00a0 Question 1 \u00a0 \ufffd \ufffd\u00a0 \ufffd \ufffd\u00a0 Suppose DeGraw Corporation, a U.S. exporter, sold a solar heating station to a Japanese customer at a price of 143.5 million yen, when the Read More …<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-216876","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/216876","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/comments?post=216876"}],"version-history":[{"count":0,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/posts\/216876\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/media?parent=216876"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/categories?post=216876"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.benedictsol.com\/blogs\/wp-json\/wp\/v2\/tags?post=216876"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}