1. Assume a Japanese firm invoices exports to the US dollars. Assume that the forward rate and spot rate of the Japanese yen are equal. If the Japanese firm expects the yen to ______ against the dollar, it would likely wish to hedge. It could hedge by_____ yen forward.
a) Appreciate; selling
b) Appreciate; buying
c) Depreciate; buying
d) Depreciate; selling
2. Suppose you have the following exchange rates: 1) $1.155C$ and E.7294/$. Computer the cross exchange rate with the Canadian dollar as the terms currency and the Euro as the base currency.?
3. Suppose a US firm issues a bond denominated in a foreign currency at a 2% lower interest rate than they could issue in the US. Over time, the foreign currency depreciates 2% against the US dollar. The US firm dollar-denominated equivalent cost of funding for this foreign issue is:
a) Approximately on savings
b) About 2% more than issuing in the US
c) About a 2% savings relative to issuing in the US
d) About a 4%saving relative to issuing in the US
4. The exchange rate at the start of the year was $1.2500/E. Now the exchange rate is $1.3750/E. the percentage change in the value of the US dollar over this time period has been.?
5. If the spot rate is $1.265/E Appreciate and then the dollar Appreciate 6%, what is the new exchange rate?
6. in the current international trade environment, countries are increasingly taking steps to strengthen their home currency so as to maximize purchasing power.?
a) T
b) F