1. 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:
Approximately on savings
About 2% more than issuing in the US
About a 2% savings relative to issuing in the US
About a 4%saving relative to issuing in the US
2. 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.?
-9.09%
+11.11%
+10%
-10%
3. If the spot rate is $1.265/E Appreciate and then the dollar Appreciate 6%, what is the new exchange rate?
$1.193/E
$1.341/E
$1.337/E
$1.189/E