Homework Answers
The diagram shows the market equilibrium exchange rate between the Japanese yen and the U.S. dollar (USD). Suppose that capital flows from the United States to Japan increase. Shift the demand a...
The diagram shows the market equilibrium exchange rate between the Japanese yen and the U.S. dollar (USD). Suppose that capital flows from the United States to Japan increase. Shift the demand and supply curves as appropriate. Quantity of yen This change in the exchange rate will result in the balances of payments on Japan's current account and financial account rising. o the balance of payments on Japan's current account falling as the balance of payments on Japan's financial This change...
Assuming the CNY/USD exchange rate is 7.0 today. CNY Interest Rate is 5% USD Interest Rate...
Assuming the CNY/USD exchange rate is 7.0 today. CNY Interest Rate is 5% USD Interest Rate is 0.5% Volatility of CNY/USD is 10% a year. Thus the 1 year forward is 7.32 (1USD = 7.32 CNY). Use the option calculator to calculate the value of a USD call/CNY Put option with strike of 7.7 and a USD put option/CNY Call option with strike of 7.00, this structure is called a collar. How is buying a call and selling a put...
1. The following exchange rates are given: USD 1 = AUD 1.33 USD 1 = GBP...
1. The following exchange rates are given: USD 1 = AUD 1.33 USD 1 = GBP 0.56 AUD 1 = GBP 0.41 An Australian investor is looking for an arbitrage opportunity. Assuming this investor has AUD 400 available (and cannot borrow additional funds) calculate the amount of profit that can be made. Give your answer in Australian dollars and cents to the nearest cent. Profit = 2. Before the collapse of Barings Bank in 1995 executives were thrilled when Nick...
€/$ exchange rate Euro quantity demanded Euro quantity supplied 0.00 275 25 0.25 250 50 0.50...
€/$ exchange rate Euro quantity demanded Euro quantity supplied 0.00 275 25 0.25 250 50 0.50 225 75 0.75 200 100 1.00 175 125 1.25 150 150 1.50 125 175 1.75 100 200 2.00 75 225 If the European Central Bank decreases interest rates, what will happen to the supply and/or demand situation for the euro? How is the equilibrium exchange rate and quantity affected? Suppose that EU inflation is higher than US inflation. What will happen to the supply...
Instructions: Show all calculations in detail. No partial credit will be given for just 1) Assume...
Instructions: Show all calculations in detail. No partial credit will be given for just 1) Assume the following information: U.S. deposit rate for 1 year U.S. borrowing rate for 1 year New Zealand deposit rate for 1 year - 8% New Zealand borrowing rate for 1 year 10% New Zealand dollar forward rate for 1 year $.40/NZS New Zealand dollar spot rate - $.39/NPS Also assume that a U.S. exporter denominates its New Zealand exports in NZS and expects to...
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...
HOME ASSIGNMENT PROBLEM №1 What is a forward price of an index JKL given the following...
HOME ASSIGNMENT
PROBLEM №1
What is a forward price of an index JKL given the following
information?
Date of pricing: November 15, 2019
Time till expiration: four months / Contract expires on March
15, 2020
Current value of an index: 2 803
Continuously compounded interest rate: 4.5 %
Continuously compounded dividend yield: 2.3%
PROBLEM №2
What is the value of the forward contract (specified in
problem №1) on January 15, 2020 if:
Forward price of contract with the same underlying...
Please give a detailed solution, thank you! 5. Given C 5000.75 (Y T) I = 2,000 -50r G 1,000 T 1,000 - 10Y - 2000r Ms 50,...
Please give a detailed
solution, thank you!
5. Given C 5000.75 (Y T) I = 2,000 -50r G 1,000 T 1,000 - 10Y - 2000r Ms 50,000 P a. Derive the IS curve and the LM curve, and find the equilibrium interest rate and output b. Government spending increases by 500. If the central bank does not react at all to this change, what is the new equilibrium output and interest rate? If instead the central bank wants to keep...
1. What is the short-run effect on the exchange rate of an increase in domestic real...
1. What is the short-run effect on the exchange rate of an increase in domestic real GNP, given expectations about future exchange rates? A.Money demand increases, the domestic interest rate increases, and the domestic currency depreciates. B.Money demand increases, the domestic interest rate increases, and the domestic currency appreciates. C.Money demand decreases, the domestic interest rate decreases, and the domestic currency appreciates. D.Money demand decreases, the domestic interest rate decreases, and the domestic currency depreciates. 2. In our discussion of...
You are given the following information about an economy(interest rate is measured in percentage points). A...
You
are given the following information about an economy(interest rate
is measured in percentage points). A five percent interest is r =
5.
1. You are given the following information about an economy (note: the interest rate is measured in percentage points. A five percent interest is r5): (M/P) = 100 (M/P)"=0.2 Y - 10 C = 150+ 0.667 YD-10 I=200 - 10r + 0.1 Y G=200 NX = 50 | T = 0.25 Y YD = Y-T A. (i)...
The diagram shows the market equilibrium exchange rate between the Japanese yen and the U.S. dollar (USD). Suppose that capital flows from the United States to Japan increase. Shift the demand and supply curves as appropriate. Quantity of yen This change in the exchange rate will result in the balances of payments on Japan's current account and financial account rising. o the balance of payments on Japan's current account falling as the balance of payments on Japan's financial This change...
Assuming the CNY/USD exchange rate is 7.0 today. CNY Interest Rate is 5% USD Interest Rate is 0.5% Volatility of CNY/USD is 10% a year. Thus the 1 year forward is 7.32 (1USD = 7.32 CNY). Use the option calculator to calculate the value of a USD call/CNY Put option with strike of 7.7 and a USD put option/CNY Call option with strike of 7.00, this structure is called a collar. How is buying a call and selling a put...
Instructions: Show all calculations in detail. No partial credit will be given for just 1) Assume the following information: U.S. deposit rate for 1 year U.S. borrowing rate for 1 year New Zealand deposit rate for 1 year - 8% New Zealand borrowing rate for 1 year 10% New Zealand dollar forward rate for 1 year $.40/NZS New Zealand dollar spot rate - $.39/NPS Also assume that a U.S. exporter denominates its New Zealand exports in NZS and expects to...
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...
HOME ASSIGNMENT
PROBLEM №1
What is a forward price of an index JKL given the following
information?
Date of pricing: November 15, 2019
Time till expiration: four months / Contract expires on March
15, 2020
Current value of an index: 2 803
Continuously compounded interest rate: 4.5 %
Continuously compounded dividend yield: 2.3%
PROBLEM №2
What is the value of the forward contract (specified in
problem №1) on January 15, 2020 if:
Forward price of contract with the same underlying...
Please give a detailed
solution, thank you!
5. Given C 5000.75 (Y T) I = 2,000 -50r G 1,000 T 1,000 - 10Y - 2000r Ms 50,000 P a. Derive the IS curve and the LM curve, and find the equilibrium interest rate and output b. Government spending increases by 500. If the central bank does not react at all to this change, what is the new equilibrium output and interest rate? If instead the central bank wants to keep...
You
are given the following information about an economy(interest rate
is measured in percentage points). A five percent interest is r =
5.
1. You are given the following information about an economy (note: the interest rate is measured in percentage points. A five percent interest is r5): (M/P) = 100 (M/P)"=0.2 Y - 10 C = 150+ 0.667 YD-10 I=200 - 10r + 0.1 Y G=200 NX = 50 | T = 0.25 Y YD = Y-T A. (i)...
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