1- What is the primary benefit of international capital flows to the US economy?
2- Explain the differences between currency futures., forwards and options.
3- A share of the ADR of a Dutch firm represents one share of that firm's stock that is traded on a Dutch stock exchange. The share price of the firm was 15 euros when the Dutch market closed. As the U.S. market opens, the euro is worth $1.10. Thus, the price of the ADR should be ____.
4- Assume the following information regarding U.S. and European annualized interest rates:
Currency Lending Rate Borrowing Rate
U.S. Dollar ($) 6.73% 7.20%
Euro (€) 6.80% 7.28%
Trensor Bank can borrow either $20 million or €20 million. The current spot rate of the euro is $1.13. Furthermore, Trensor Bank expects the spot rate of the euro to be $1.10 in 90 days. What is Trensor Bank's dollar profit from speculating if the spot rate of the euro is indeed $1.10 in 90 days?
5- Assume that the US announces a sudden increase in its inflation rate, relative to that of China. What is the likely impact of this news on the Chinese Yuan?
6- The value