Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 36, Problem 13E
To determine
(a)
To compute:
The amount of U.S. dollars needed to settle the transaction.
To determine
(b)
To compute:
The amount of U.S. dollars needed to settle the transaction.
To determine
(c)
To compute:
The amount of U.S. dollars needed to settle the transaction.
To determine
(d)
To compute:
The amount of U.S. dollars needed to settle the transaction.
To determine
(e)
To compute:
The amount of U.S. dollars needed to settle the transaction.
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If one U.S. dollar is traded on the foreign exchange market for about 0.89 euros, then
one euro can purchase about
U.S. dollars.
a) 0.75
b) 1.12
c) 1.75
d) 0.89
Suppose a British investor is expected to receive payment of 150,000 dollars ($) in twelve months from a U.S. bank. The annual interest rate in dollar deposit is 5% and the annual interest rate in pound deposit is 10%. If the present exchange rate is 0.50 pound per dollar deposit and interest parity holds, then.
(a) How many pounds does the British investor expect to receive at the maturity date of his U.S. investment? (Show the computation process).
(b) How many pounds were initially invested? Fully explain all your answers (calculation).
13- You are a U.S. importer who buys goods from many different countries. How many U.S. dollars do you need to settle each of the following invoices?
1,000,000 Australian dollars for wool blankets (exchange rate: A$1 = $0.769)
500,000 British pounds for dishes (exchange rate: £1 = $1.5855)
100,000 Indian rupees for baskets (exchange rate: Rs1 = $0.0602)
350 million Japanese yen for stereo components (exchange rate: ¥1 = $0.0069)
825,000 euro for German wine (exchange rate: €1 = $1.05)
14- What is the dollar value of the invoices in exercise 13 if the dollar:
Depreciates 10 percent against the Australian dollar
Appreciates 10 percent against the British pound
Depreciates 10 percent against the Indian rupee
Appreciates 20 percent against the Japanese yen
Depreciates 100 percent against the euro
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