True or false:
If the exchange rate for the Peso went from 11 peso/$ to 12 peso/$, the Dollar strengthened.
True or false: If the exchange rate for the Peso went from 11 peso/$ to 12...
Suppose the dollar-euro exchange rate is 1.56$/€ and the dollar-peso exchange rate is 0.072$/peso. A US firm is considering a new project. The project will cost 2852 pesos and $173 today and will generate 105€ and $142 of revenue next year. The real interest rate is 4%. a.) What is the present value of cash flow today in dollars? b.) What is the present value of cash flow from next year in dollars?
3. Questions and Problems 3 When the equilibrium exchange rate rises from, say, 10 cents for one Mexican peso to 12 cents for one Mexican peso, Americans must now pay 8,90,12,10 to buy one peso. It is said that the dollar has depreciated in relation to the Mexican peso. At the same time, the peso has depreciated in relation to the U.S. dollar, as it now takes appreciated instead of to buy one dollar. 8.33,T00,9.83,10 10, 9.83,8.33,100 pesos Grade It...
The peso is the currency of Argentina. Suppose that the peso/$ forward exchange rate, F, is exactly equal to traders' expectations for the value of the peso/$ spot rate, E, in six months' time. a. If F = 1.15 and E= 1.10, what is the forward discount on pesos? b. Assuming that interest rate parity (IRP) holds, what would you expect to be true of the interest differential between six-month dollar deposits and six-month peso deposits, that is, R$ -...
True or False? 1) PepsiCo has a higher debt ratio than Chevron (use the latest financial statements on Yahoo). 2) Apple has a higher profit margin than Gilead Science (use the latest financial statements on Yahoo). 3) Even if a firm's cash flow projections indicate that it will soon be unable to meet its interest payments, a bankruptcy case cannot begin until the firm defaults on a scheduled payment. 4) When a firm increases its common stock dividend, it must...
The Mexican peso spot exchange rate is 12.75 peso per dollar. The nominal annual interest rate in Mexico is 6% and the nominal annual interest in the US is 1%. What is the approximate 5-year forward premium/discount of the peso? A. 27.3% premium B. 27.3% discount C. 21.5% premium D. 21.5% discount E. 5.0% premium
1-year forward exchange rate, U.S. dollars required to buy 1 peso $0.12 Annual depreciation rate of peso against dollar 5.00% Peso-denominated dividend annual growth rate 10.00% Number of common shares owned 5,000,000 Cost of equity, rs 15.00% Chapman, Inc.'s Mexican subsidiary, V. Gomez Corporation, is expected to pay to Chapman 50 pesos in dividends in 1 year after all foreign and U.S. taxes have been subtracted. The exchange rate in 1 year is expected to be $0.12 per peso. After...
1. On January 1, 1975, the Mexican peso/U.S.$ exchange rate was Ps 12.5 = $1. By 1985, the exchange rate stood at Ps 208.9 = $1. a. Are these direct or indirect quotes? b. By how much did the Mexican peso appreciate or depreciate against the dollar over this 10-year period? c. By how much did the dollar appreciate or depreciate against the peso over this period? 2. In the second half of 1997, the Indonesian rupiah depreciated by 84%...
Assuming Call option in the foreign exchange market (using the dollar-peso exchange rate), explain briefly the following market scenarios: a) in the money; b) at the money; and c) out of the money.
Suppose the exchange rate between the Danish krone and the U.S. dollar is 14 DKK = $1 and the exchange rate between the Chilean peso and the U.S. dollar is 220 CLP = $1. The exchange rate between the U.S. dollar and the Danish krone in terms of dollars per krone is $ (Round your response to four decimal places.) The exchange rate between the U.S. dollar and the Chilean peso in terms of dollars per peso is $ ....
Suppose that Mexico has a fixed exchange rate regime, and value of peso is fixed against the dollar. If, everything else constant, Mexico starts growing slower than US, how should the Mexico monetary policy react to maintain the fixed exchange rate regime?