1. Suppose the exchange rate is $1.2655/€. From the perspective of a U.S. currency trader, is this a direct exchange rate or an indirect exchange rate?
2. Suppose the exchange rate at the start of the year was $1.6105/£. Since the start of the year the pound has appreciated 5%. What is today's exchange rate? (Keeping the USD as the terms currency and the GBP as the base currency)
3. Suppose the exchange rate at the start of the year was $1.6105/£. Since the start of the year the dollar has depreciated 3%. What is today's exchange rate? (Keeping the USD as the terms currency and the GBP as the base currency)
4. If the U.S. dollar depreciates relative to the MXN (Mexican peso), the dollar cost to a U.S. firm that buys products produced in Mexico and pays in MXN will ______________. (Answer either rise or fall)
5. Circle the correct quote to use. You are converting dollars into euros.
$1.4653/€ bid
$1.4677/€ ask
6. If Sarah does a currency exchange and she tells you that she converted at $.1022/MXN ask, what currency did Sarah sell and what currency did Sarah buy?
Sarah sold the ________
Sarah bought the _________
7. Suppose you bought a stock for $50 a while ago and now, it is worth $57. When you bought the stock, the CPI index was at 226, and now it is at 234.
What is the nominal return?
What is the inflation rate?
What is the real rate of return?
8. You invest in foreign stocks (Japanese Yen denominated stocks). General Electric is an international bond issuer(Japanese Yen denominated bonds). Generally speaking, ifthe Japanese Yen appreciates over time this will be __________ for you and ____________ for General Electric.
A. Good; Good
B. Good; Bad
C. Bad; Bad
D. Bad; Good
9. Convert $586 into euros at an exchange rate of $1.2145/€. How many Euros will you have?
10. Using the quotes in question 5 of this homework, convert €1,000,000 into U.S. dollars. How many dollars will you have?
11. If you and Dan compete in a triathlon and you beat Dan in the running portion by 3 hours, you beat Dan in the biking portion by 4 minutes, and in the swimming portion Dan hasto be saved by a rescue boat, in what portion of the triathlon does Dan have a relative comparative advantage? Explain