Question 1 Suppose that the Canadian dollar was worth 1.15 euros on January 1. Today, each euro is worth .82 Canadian dollars. Find the percentage appreciation/depreciation of the Canadian dollar from the European point of view. (Round any intermediate steps to four decimal places)
-.0604
.057
.0604
-.057
.5 points
Question 2 Suppose that the value of the Swiss franc appreciates by 15% from the Canadian point of view. What is the percentage appreciation/depreciation of the Canadian dollar from the Swiss point of view?
-17.65%
17.65%
-13.04%
15.00%
.5 points
Question 3 An increase in the value of a domestic country's currency:
an increase in government aid to other nations
an increase in the balance of trade
a rise in the cost of foreign produced goods to domestic citizens
a rise in the cost of domestic produced goods to foreign citizens
.5 points
Question 4 Suppose that a British citizen observes the following quotes between the pound and the peso:
1/1: MP12/BP
5/1: BP.07/MP
Find the percentage change in the value of the peso from the British point of view.
.1905
-.16
-.1905
.16
.5 points
Question 5 A decrease in Canadian inflation relative to Japanese inflation would likely ____ the Canadian demand for yen and ____ the supply of yen for sale.
reduce; increase
increase; reduce
reduce; reduce
increase; increase
.5 points
Question 6 Assume that the real interest rate becomes much higher in the U.K. relative to the U.S. This will place ____ pressure on the value of the British pound. Also, assume that inflation rates in the U.S. begin to rise relative to inflation rates in the U.K. The change in inflation will place ____ pressure on the value of the British pound.
upward; downward
upward; upward
downward; upward
downward; downward
.5 points
Question 7 The real interest rate adjusts the nominal interest rate for
exchange rate movements
inflation
income growth
government controls
.5 points
Question 8 Any event that decreases the Mexican demand for the dollar should result in ____ in the value of the peso with respect to the dollar, all else being equal
an increase
a decrease
no change
.5 points
Question 9 If someone tells you that the dollar appreciated relative to the pound, it must also be true that the pound depreciated against the dollar
True
False
.5 points
Question 10 Governments can affect the value of their nation's currency by purchasing or selling currency in the foreign exchange market.
True
False
.5 points
Question 11 Use the following table to answer the next four questions:
Currency
5/1
5/2
5/3
5/4
Pounds
.8BP/E
1.3E/BP
1.4E/BP
.85BP/E
Francs
1.1E/SF
1.08E/SF
.92SF/E
1.13E/SF
Can. Dollars (CD)
1.2CD/E
1.18CD/E
.88E/CD
.85CD/E
Australian Dollars (AD)
1.02E/AD
1.04E/AD
.93AD/E
1.1E/AD
Find the percentage appreciation/depreciation of the euro from the Swiss point of view from 5/3 to 5/4. (Round any intermediate steps to four decimal places)
-.0381
-.0396
.0381
.0396
.5 points
Question 12 How many pounds would you receive in exchange for 80,000 Canadian dollars on 5/2? (Round any intermediate steps to four decimal places)
122,718.21
52,151.24
53,333
83,333.33
.5 points
Question 13 How many francs would you receive for 75,000 Australian dollars on 5/2? (Round intermediate steps to 4 decimal places)
72,225
77,884.62
66,773.50
84,240
.5 points
Question 14 Suppose you convert 400,000 euros to Australian dollars on 5/2. You then convert your Australian dollars into francs on 5/3. Finally, you convert your francs to pounds on 5/4. How many pounds will you end up with? Round intermediate steps to four decimal places.
396,126.74
373,438.55
365,450.79
395,252.67
.5 points
Question 15 The forward market deals with the exchange of foreign currency for immediate delivery.
True
False
.5 points
Question 16 Suppose a bank customer with €1,000,000 wishes to trade out of euro and into Japanese yen. The dollar-euro exchange rate is quoted as $1.50/ € and the yen-dollar exchange rate is quoted at ¥100/$. How many yen will the customer get? (Round intermediate steps to four decimal places.)
6700
62,500,000
149,253,731.3
160,000,000
.5 points
Question 17 Suppose you observe the following exchange rates:
$2.00/£
€.8/$
Find the value of euros in terms of pounds.
£1.6/€
£.625/€
£2.5/€
£.4/€
.5 points
Question 18 Indirect exchange rate quotations from the Canadian perspective state the value a unit of foreign currency in terms of Canadian dollars.
True
False
.5 points
Question 19 You observe the following currency quotes during the course of two days:
2/10: SF1.3/$
2/11: $.8/SF
Find the percentage appreciation/depreciation of the dollar from the Swiss view. Round intermediate steps to four decimal places.
.625
.04
-.0385
.0385
.5 points
Question 20 In order to calculate a cross exchange rate between two currencies, each currency must have a known relationship between a third currency.
True
False
.