Homework Answers
Answer - The new exchange rate for yen will be $0.0070
Reason -
New exchange rate = ( 1 + US rate ) ÷ (1 + Japan rate) * current exchange rate
= (1 + 0.03) ÷ ( 1 + 0.10) * 0.0075
= 0.9363636 * 0.0075
= 0.007022727 or $0.0070 ( rounded off)
Add Answer to:
24. The inflation rate in the U.S. is 3%, while the inflation rate in Japan is...
Heidi Jensen is attempting to determine whether US/Japanese financial conditions are at parity. The current spot...
Heidi Jensen is attempting to determine whether US/Japanese financial conditions are at parity. The current spot rate is a flat ¥89.00/$, while the 360-day forward rate is ¥84.90/$. Forecast inflation is 1.100% for Japan, and 5.900% for the US. The 360-day yen deposit rate is 4.700%, and the 360-day dollar deposit rate is 9.500%. Calculate whether interest rate parity, purchasing power parity, and international fisher effect conditions hold between Japan and the US. Find the forecasted change in the Japanese...
For the first three questions consider the U.S.- Japan exchange rate, expressed as yen per dollar....
For the first three questions consider the U.S.- Japan exchange rate, expressed as yen per dollar. Using the basic supply and demand diagram as illustrated at the beginning of Week 9 lecture slides, answer the following: 1. Other things being equal, an increase in the Japanese price level will shift the supply curve of dollars_________, the demand curve for dollars__________ and cause the dollar to ________. a. rightward, leftward, depreciate b. leftward, rightward, depreciate c. leftward, rightward, appreciate d. rightward,...
Assume that uncovered interest rate parity holds between the Japanese yen and the U.S. dollar. If...
Assume that uncovered interest rate parity holds between the Japanese yen and the U.S. dollar. If today the 1-year riskless interest rate in Japan is 5%, the one-year riskless interest rate in the U.S. is 1%, and the spot exchange rate is $.01 per yen, what is the expected exchange rate one-year from today? Suppose that expected inflation in the U.S. increased. What would happen to the current (spot) exchange, i.e. will it increase or decrease? Explain your reasoning.
Recent commitment of most automotive brands on electrical vehicle market has led to an increase in global demand for semiconductor chips. Assuming Japan is the only global supplier for semiconductor and due to their increasing inflation, their central ba
Recent commitment of most automotive brands on electrical vehicle market has led to an increase in global demand for semiconductor chips. Assuming Japan is the only global supplier for semiconductor and due to their increasing inflation, their central bank has conducted contractionary monetary policy to fight inflation, determine what would happen to the demand of Japanese Yen, supply of Japanese Yen and the exchange rate of Yen-USD in the foreign exchange market. Explain your answer.
Jacksonville Corp. is a U.S.‑based firm that needs $600,000. It has no business in Japan but...
Jacksonville Corp. is a U.S.‑based firm that needs $600,000. It has no business in Japan but is considering one‑year financing with Japanese yen, because the annual interest rate would be 5 percent versus 9 percent in the United States. Assume that interest rate parity exists. a) Can Jacksonville benefit from borrowing Japanese yen and simultaneously purchasing yen one year forward to avoid exchange rate risk? Explain. b) Assume that Jacksonville does not cover its exposure and uses the forward rate...
answer these 4 . will rate after Which of the following increases the price of the...
answer these 4 . will rate after
Which of the following increases the price of the dollar relative to the Mexican peso? o an increase in the demand for dollars an increase in the supply of dollars O an increase in the demand for pesos an increase in the supply of pesos If a Germany company must purchase products from a U.S. firm, it must first O convert its euros into US dollars in the foreign exchange market. O convert...
4. Suppose that 1 British pound exchanges for 1.4 U.S. dollars and 100 Japanese yen. Over...
4. Suppose that 1 British pound exchanges for 1.4 U.S. dollars and 100 Japanese yen. Over the next decade, Japanese prices remain constant, while inflation doubles American prices, and uadruples British prices. What would the purchasing-power parity theory lead one to expect about the exchange rates between the three currencies 10 years hence?
Derek Tosh and Yen-Dollar Parity. Derek Tosh is attempting to determine whether US/Japanese financial conditions are...
Derek Tosh and Yen-Dollar Parity. Derek Tosh is attempting to determine whether US/Japanese financial conditions are at parity. The current spot rate is a flat ¥89.00/$, while the 360-day forward rate is ¥84.90/$. Forecast inflation is 1.099% for Japan, and 5.896% for the US. The 360-day euro-yen deposit rate is 4.703%, and the 360-day euro-dollar deposit rate is 9.498%. a. Calculate whether international parity conditions hold between Japan and the United States. b. Find the forecasted change in the Japanese...
Question 7 The U.S. inflation rate is expected to be 5% over the next year, while...
Question 7 The U.S. inflation rate is expected to be 5% over the next year, while the European inflation rate is expected to be 5%. The current spot rate of the euro is $1.03. Using purchasing power parity, the expected spot rate at the end of one year is $____. 1.02 1.03 1.04 1.05
The spot rate between the Japanese yen and the U.S. dollar is ¥106.57/$, while the one-year...
The spot rate between the Japanese yen and the U.S. dollar is ¥106.57/$, while the one-year forward rate is ¥105.73/$. The one-year risk-free rate in the U.S. is 2.39 percent. If interest rate parity exists, what is the one-year risk-free rate in Japan?
answer these 4 . will rate after
Which of the following increases the price of the dollar relative to the Mexican peso? o an increase in the demand for dollars an increase in the supply of dollars O an increase in the demand for pesos an increase in the supply of pesos If a Germany company must purchase products from a U.S. firm, it must first O convert its euros into US dollars in the foreign exchange market. O convert...
4. Suppose that 1 British pound exchanges for 1.4 U.S. dollars and 100 Japanese yen. Over the next decade, Japanese prices remain constant, while inflation doubles American prices, and uadruples British prices. What would the purchasing-power parity theory lead one to expect about the exchange rates between the three currencies 10 years hence?
Most questions answered within 3 hours.
-
What is the net ionic equation for the reaction that would occur
when an aqueous solution...
asked 46 minutes ago -
A
student bought $1000 worth of furniture. What is the equivalent
annual cost if it is...
asked 54 minutes ago -
What taboo subject did Ida B. Wells suggest was consensual
between black men and white women?...
asked 2 hours ago -
You have just been hired by the EPA to help with the new gas
mileage standards...
asked 3 hours ago -
4) A firm is hit by increases in its wage rate, w.
a) How does this...
asked 3 hours ago -
A square current loop 5.4 cm on each side carries a 510 mA
current. The loop...
asked 5 hours ago -
What are five tips in conducting knowledge assessment/literature
review research? Each of these tips needs to...
asked 6 hours ago -
Antigen presenting cells link innate and adaptive immune
responses. In the theoretical scenario where phagosomes cannot...
asked 6 hours ago -
Dealing with conflict, in my opinion, is a skill and an art. I
believe that those...
asked 7 hours ago -
6. A long straight wire with circular cross section and radius
1.5 cm carries a 1.2...
asked 7 hours ago -
Deacon Corporation has provided the following financial data
from its balance sheet and income statement:
Year...
asked 7 hours ago -
List and discuss at least three variables from everyday life for
which you expect the variable ...
asked 7 hours ago