Question

4) (6 pts) The bank offers the following exchange rates EUR:USD (means the number of US$ per Euro) GBP:USD (means the number of US$ per GBP) USD JPY (means the number of JPY per US$) USD:CAD (means the number of CAD per USS) Bid Ask 1.2120 1.2270 1.3815 1.3945 107.23 109.62 1.2534 1.2856 imprt Your US Company buys parts from a German.supplier for 55,000 Euros and buys the same parts from a Canadian supplier for 85,000 Canadian dollars a. What is the US dollar cost for the German order? 67425 US $ b. What is the US dollar cost for the Canadian order? US $ Assume the price remains constant (you pay,000 Euros and 85,000 Canadian dollars) n- month. Briefly explain whether the US Company who imports products is better off or worse off next month if the US dollar strengthens against the Euro and strengthens agains the Canadian dollar and why? C. Strenghen cgaiust Euro: worst off Strengthen acainst CAD: bettec offwken ip best to go with Cantries haweweakor cu then USoIlal in this case

Answer 1

Dollar cost for the German andar: EUR :050 Given ruote is 112120 - 1.2270 Direct Quote os Dollar cost for German ondan = 55000 x 1.2270 = $67485 US Dollar cost for the Canadian orden: Osp : CAD - 2534 - 1.9856 Given Quote is indirect Quote-convert in en Direct Quote CADO USD beso - 19534 - 0.1718 - 0.1918 có USD us Dallar cost for the car ar cost for the canadian orden = 85000*0.7978 = $67813

strungthen against ewro & Batter off strungthen against CAD : Better off If Dollar strungthun No. of poliar outflow it is better off to the us company. is reduced