ZuoTi.Pro
Question

Suppose that the current exchange rate is 1$ = 0.80€, and the expected exchange rate is...

Suppose that the current exchange rate is 1$ = 0.80€, and the expected exchange rate is 1.30$ = 1€, If the U.S dollar gives a 5% returns and the euro gives 2% returns. Do you prefer to invest in local currency ($) or euros?

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

det wis be home country g= 5% in home . So if it invested in home. After a year = 14 51 of 1 . After I year = 1 +0.05= 1.05 y

0 0
Add a comment
Know the answer?
Add Answer to:
Suppose that the current exchange rate is 1$ = 0.80€, and the expected exchange rate is...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • 5. Suppose the current spot exchange rate is $1.17 to €1. The dollar is expected to...

    5. Suppose the current spot exchange rate is $1.17 to €1. The dollar is expected to appreciate to $1.11 to €1 during the next year. (Assume inflation and risk etc. are the same between the Eurozone and the U.S.) (a) What is the expected currency appreciation gain for the dollar? (Give this as a percentage and round to the nearest 0.1%.) (b) Suppose the interest rate on 1-year corporate bonds in the U.S. is 4%. What is the expected total...

  • 3) The exchange rate between the dollar and the euro is $1.30/€. a) A good that...

    3) The exchange rate between the dollar and the euro is $1.30/€. a) A good that costs 100 euros in France sells for how much in the U.S.? b) A good that costs 100 dollars in the U.S. sells for how much in France? c) Suppose that the exchange rate changes to $1.35/ €. Which currency has appreciated? d) Which currency has depreciated? e) What is the new cost in the U.S. of a French good that sells for 100...

  • 15 Suppose that the current exchange rate is €1.00 - $1.60. The indirect quote from the...

    15 Suppose that the current exchange rate is €1.00 - $1.60. The indirect quote from the US. perspective is A) €0.6250 - $1.00 3) €1.50 - $1.00 €1.00 - $1.60 Dy none of the options 19) The bid price A) is the price that a dealer stands ready to pay B) is the price that a dealer stands ready to sell at. is the price that the dealer has just paid for something, his historical cost of the most recent...

  • 5. Show the relationship between private saving, public saving, investment, and the current account. 6. If...

    5. Show the relationship between private saving, public saving, investment, and the current account. 6. If the U.S. dollars give a 3% rate of return, and euro gives 4%. Suppose the current exchange rate 1 euro=1.2 dollars. And expected exchange rate 1.2 euro=1 dollar. Should you invest in U.S. dollars or euro?

  • 5. Suppose the current spot exchange rate is $1.17 to €1. The dollar is expected to...

    5. Suppose the current spot exchange rate is $1.17 to €1. The dollar is expected to appreciate to $1.11 to €1 during the next year. (Assume inflation and risk etc. are the same between the Eurozone and the U.S.) (a) What is the expected currency appreciation gain for the dollar? (Give this as a percentage and round to the nearest 0.1%.) (b) Suppose the interest rate on 1-year corporate bonds in the U.S. is 4%. What is the expected total...

  • Problem 2.(35 points) Suppose that the current Japan/US exchange rate is Eyys - 120, while the...

    Problem 2.(35 points) Suppose that the current Japan/US exchange rate is Eyys - 120, while the current Japan/Euro exchange rate is Eyje = 130 and the Euro/US exchange rate is Ee/s-0.7. Suppose your bank can exchange dollars, yen and euros freely and without extra charge at the current exchange rate. Now consider the following scheme. 1. Suppose you take out $100 from your savings account and convert them into yen at the current exchange rate. How many yen would you...

  • Suppose that the current spot exchange rate is 0.80/$ and the three-month forward exchange rate i...

    Suppose that the current spot exchange rate is 0.80/$ and the three-month forward exchange rate is 0.7813/$. The three-month interest rate is 5.60 percent per annum in the United States and 5.40 percent per annum in France. Assume that you can borrow up to $1,000,000 or 800,000. assuming that you want to realize profit in terms of U.S. dollars. The size of your arbitrage profit is S rounded) Suppose that the current spot exchange rate is 0.80/$ and the three-month...

  • Suppose the exchange rate between U.S. dollars and Swiss francs is SF 1.3406 = $1.00, and...

    Suppose the exchange rate between U.S. dollars and Swiss francs is SF 1.3406 = $1.00, and the exchange rate between the U.S. dollar and the euro is $1.00 = 1.153 euros. What is the cross-rate of Swiss francs to euros (SF/Euro)? Enter your answer rounded off to FOUR decimal points.

  • Suppose the exchange rate between U.S. dollars and Swiss francs is SF 0.9704 = $1.00, and...

    Suppose the exchange rate between U.S. dollars and Swiss francs is SF 0.9704 = $1.00, and the exchange rate between the U.S. dollar and the euro is $1.00 = 0.9938 euros. What is the cross-rate of Swiss francs to euros (SF/Euro)? Enter your answer rounded off to FOUR decimal points.

  • 7. Suppose the exchange rate between U.S. dollars and Swiss francs is $1.00 = 1.50 Swiss...

    7. Suppose the exchange rate between U.S. dollars and Swiss francs is $1.00 = 1.50 Swiss franc and the exchange rate between the U.S. dollar and the euro is $1.00 = 1.15 euros. What is the cross rate of the Swiss franc to the euro (SF/euro)?

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT