True that most foreign exchange transactions involve U.S dollars on one side, even though a foreign exchange transaction can involve any two currencies. And that is why the US dollar is considered as a vehicle currency.
Most foreign exchange transactions involve U.S. dollars on one side. True or False True False
True or False To a U.S. trader of foreign currencies, a direct quote indicates U.S. dollars received for each one unit of the foreign currency
The graph below shows demand and
supply curves for U.S. dollars in the foreign exchange
market. As you can see, the exchange rate (in terms of
foreign currency units per dollar) is initially equal to
E0.
Suppose that next year there’s
a huge increase in the number of foreigners – from Europe, China,
and everywhere else – who decide to visit the U.S. as
tourists.
How would this huge increase in tourism in the U.S. affect the
exchange rate? To answer this,...
A U.S. company sells merchandise to a foreign company denominated in U.S. dollars. Which of the following statements is true? A) If the foreign currency depreciates, a foreign exchange loss will result. B) No foreign exchange gain or loss will result. C) If the foreign currency depreciates, a foreign exchange gain will result. D) If the foreign currency appreciates, a foreign exchange loss will result E) If the foreign currency appreciates, a foreign exchange gain will result.
true or false, explain
Define the exchange rate as the amount of U.S. dollars per euro (EUSD/euro). Under the General Model of Long-Run Exchange Rates of Chapter 5 an increase in the demand for U.S. output relative to European output causes a long run appreciation of the dollar against the euro. Do not forget to include a graph to support your answer. (15 points)
Suppose it takes 1.3037 U.S. dollars today to purchase one British pound in the foreign exchange market, and currency forecasters predict that the U.S. dollar will depreciate by 12% against the pound over the next 30 days. How many dollars will a pound buy in 30 days? Enter your answer rounded to four decimal places. For example, if your answer is 12.34567 then enter as 12.3457 in the answer box.
1. For a U.S. investor, Eurobonds are subject to foreign exchange risk. True False 2. When a bond's rating changes from AA to A and investors did not anticipate the change A. the yield and the price will rise. B. the coupon rate will stay the same and the price will fall. C. the coupon rate will fall and the price will rise. D. both the coupon rate and the price will rise.
CompuTech is a U.S.-based multinational corporation. Foreign sales are made at prices set in U.S. dollars, but foreign purchases are often made at prices stated in foreign currencies. If the exchange rate for the U.S. dollar has risen against most foreign currencies throughout the year, would CompuTech have recognized primarily gains or losses as a result of exchange rate fluctuations? Explain.
One source of the supply of dollars in the foreign exchange rate market is Group of answer choices the sale of U.S. domestic financial assets to foreigners. imports of merchandise into the United States. gold sold to foreigners. the purchase of U.S. exports.
1. Exchange Rate: Suppose the direct foreign exchange rates in U.S. dollars are: 1 British pound = $1.60 1 Canadian dollar = $0.74 Required: a. What are the indirect exchange rates for the British pound and the Canadian dollar? b. How many pound must a British company pay to buy goods costing $8,000 from the U.S. company? c. How many U.S. dollars must be paid for a purchase costing 4,000 Canadian dollars? 2. Changes in Exchange Rates: Upon arrival at...
1. The quantity of U.S. dollars that traders plan to sell in the foreign exchange market in a given period of time is independent of ______. A. the expected future exchange rate B. the price of gold C. the exchange rate D. U.S. demand for imports 2. Between 2014 and 2015, traders expected the U.S. dollar to ______ against the euro and it ______. A.appreciate; depreciated B.appreciate; did appreciate C.depreciate; did depreciate D.depreciate; appreciated Between 2001 and 2008, traders expected...