Assume that three years ago the exchange rate between $ and Euros .71 and the euro...
Assume that three years ago the exchange rate between $ and Euros .71 and the euro decreased in value by 20%. What the current exchange rate?
A- LESS THAN € .50/$
B- BETWEEN € .5/$ AND € .64/$
C- BETWEEN € .57/$ and € .64/$
D-between € .64/$ and .71/$
e- between € .71/$ and .78/$
f- between €.78/$ and € .85/$
g-greater than €.85/$
Homework Answers
exchange rate 3 years ago, 1 $ = Euro 0.71
Since Euro decreased in value, there will be more euros per dollar after depreciation
Hence, current exchange rate will be 1 $ = Euro 0.71*1.2 = Euro 0.852
Hence the correct answer is
g-greater than €.85/$
Add Answer to:
Assume that three years ago the exchange rate between $ and
Euros .71 and the euro...
The present exchange rate between US dollars and Euros is 1.34 $/Euro. The price of a...
The present exchange rate between US dollars and Euros is 1.34 $/Euro. The price of a domestic 180-day Treasury bill is $99.50 per $100 face value. The price of the analogous Euro instrument is 98.50 Euros per 100 Euro face value. a. What is the theoretical 180-day forward exchange rate? b.Suppose the 180-day forward exchange rate available in the marketplace is 1.31 $/Euro. This is less than the theoretical forward exchange rate, so an arbitrage is possible. Describe a risk-free...
1. The present exchange rate between US dollars and Euros is 1.34 $/Euro. The price of...
1. The present exchange rate between US dollars and Euros is 1.34 $/Euro. The price of a domestic 180-day Treasury bill is S99.50 per $100 face value. The price of the analogous Buro instrument is 98.50 Euros per 100 Euro face value (a) What is the theoretical 180-day forward exchange rate? (b) Suppose the 180-day forward exchange rate available in the marketplace is 1.31 $/Euro. This is less than the theoretical forward exchange rate, so an arbitrage is possible. Describe...
7. Fixed exchange rates Consider the exchange rate between the Saudi riyal and the euro. Suppose...
7. Fixed exchange rates Consider the exchange rate between the Saudi riyal and the euro. Suppose the Saudi government and the Eurozone governments agree to fix the exchange rate at 2.5 riyal per euro, as shown by the grey line on the following graph Refer to the following graph when answering the questions that follow. 4.0 3.5 Supply of Euros 3.0 2.5 ш2.0 O 1.5 Demand for Euros 1.0 0.5 0 2 101214 16 QUANTITY OF EUROS (Billions) At the...
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...
5. Changes in the foreign-exchange market The following questions focus on the exchange rate between the euro and the D...
5. Changes in the foreign-exchange market The following questions focus on the exchange rate between the euro and the Danish krone. Assume the exchange rate is flexible. The exchange rate is defined as the number of euros you must pay for one krone. Suppose an economic downturn in Denmark causes Danish incomes to decrease, while European incomes remain unchanged Shift the appropriate curve or c on the following graph to illustrate how this affects the market for Danish kroner if...
The current euro exchange rate is 51.10 (dollar price of euro). Assume zero interest rates for...
The current euro exchange rate is 51.10 (dollar price of euro). Assume zero interest rates for both currencies. If you are long 100 contracts of 2-yr forward contracts on euro with a delivery price (K) of $1.10. what will be the current value of your forward position?
Assume that the euro/dollar exchange rate is €1 $1.50. If it costs $30 to buy a...
Assume that the euro/dollar exchange rate is €1 $1.50. If it costs $30 to buy a European product, the stated price of the product would be €45. True False QUESTION 2 Assume that a firm's Foreign Direct Investment (FDI) strategy has a required rate of return of 20% p.a. The initial investment is $2,000,000, and the firm expects end-of-year earnings of $1,250,000 each year for three years. What is the net present value (NPV) of the firm's FDI strategy? $633,102...
The current spot exchange rate between U.S. dollar and euro is $1.20/€ and a June 2020...
The current spot exchange rate between U.S. dollar and euro is $1.20/€ and a June 2020 call option on euro with a strike price of $1.21/€ commands a premium of $0.015/€. What is the intrinsic value of this option? What is the profit/loss if the option is exercised when the spot rate is $1.23/€ if the going interest U.S. interest rate is 2%?
SFF 7 5:0 Assume there is a fixed exchange rate between the Euro and U.S. dollar....
SFF 7 5:0 Assume there is a fixed exchange rate between the Euro and U.S. dollar. The expected return and standard deviation of return on the U.S. stock market are 16% and 13%, respectively. The expected return and standard deviation on the DAX stock market are 11% and 18%, respectively. The covariance of returns between the U.S. and German stock market is 1.5%. If you invested 50% of your money in the German (DAX) stock market and 50% in the...
appreciate/depreciate appreciate/depreciate increase/decrease increase/decrease appreciate/depreciate The following questions focus on the exchange rate between the euro...
appreciate/depreciate
appreciate/depreciate
increase/decrease
increase/decrease
appreciate/depreciate
The following questions focus on the exchange rate between the euro and the Danish krone. Assume the exchange rate is flexible. The exchange rate is defined as the number of euros you must pay for one krone. Suppose an economic downturn in Denmark causes Danish incomes to decrease, while European incomes remain unchanged. Shift the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner if all...
1. The present exchange rate between US dollars and Euros is 1.34 $/Euro. The price of a domestic 180-day Treasury bill is S99.50 per $100 face value. The price of the analogous Buro instrument is 98.50 Euros per 100 Euro face value (a) What is the theoretical 180-day forward exchange rate? (b) Suppose the 180-day forward exchange rate available in the marketplace is 1.31 $/Euro. This is less than the theoretical forward exchange rate, so an arbitrage is possible. Describe...
7. Fixed exchange rates Consider the exchange rate between the Saudi riyal and the euro. Suppose the Saudi government and the Eurozone governments agree to fix the exchange rate at 2.5 riyal per euro, as shown by the grey line on the following graph Refer to the following graph when answering the questions that follow. 4.0 3.5 Supply of Euros 3.0 2.5 ш2.0 O 1.5 Demand for Euros 1.0 0.5 0 2 101214 16 QUANTITY OF EUROS (Billions) At the...
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...
5. Changes in the foreign-exchange market The following questions focus on the exchange rate between the euro and the Danish krone. Assume the exchange rate is flexible. The exchange rate is defined as the number of euros you must pay for one krone. Suppose an economic downturn in Denmark causes Danish incomes to decrease, while European incomes remain unchanged Shift the appropriate curve or c on the following graph to illustrate how this affects the market for Danish kroner if...
The current euro exchange rate is 51.10 (dollar price of euro). Assume zero interest rates for both currencies. If you are long 100 contracts of 2-yr forward contracts on euro with a delivery price (K) of $1.10. what will be the current value of your forward position?
Assume that the euro/dollar exchange rate is €1 $1.50. If it costs $30 to buy a European product, the stated price of the product would be €45. True False QUESTION 2 Assume that a firm's Foreign Direct Investment (FDI) strategy has a required rate of return of 20% p.a. The initial investment is $2,000,000, and the firm expects end-of-year earnings of $1,250,000 each year for three years. What is the net present value (NPV) of the firm's FDI strategy? $633,102...
SFF 7 5:0 Assume there is a fixed exchange rate between the Euro and U.S. dollar. The expected return and standard deviation of return on the U.S. stock market are 16% and 13%, respectively. The expected return and standard deviation on the DAX stock market are 11% and 18%, respectively. The covariance of returns between the U.S. and German stock market is 1.5%. If you invested 50% of your money in the German (DAX) stock market and 50% in the...
appreciate/depreciate
appreciate/depreciate
increase/decrease
increase/decrease
appreciate/depreciate
The following questions focus on the exchange rate between the euro and the Danish krone. Assume the exchange rate is flexible. The exchange rate is defined as the number of euros you must pay for one krone. Suppose an economic downturn in Denmark causes Danish incomes to decrease, while European incomes remain unchanged. Shift the appropriate curve or curves on the following graph to illustrate how this affects the market for Danish kroner if all...
Most questions answered within 3 hours.
-
1. Why are the advantages and disadvantages of object-oriented
databases? 2. What are data marts? How...
asked 2 minutes ago -
A Porsche challenges a Honda to a 4.00×102m race. Because the
Porsche's acceleration of 3.30 m/s2...
asked 3 minutes ago -
A sample of C3H8 has 1.60×1024 H atoms.
How many carbon atoms does the sample contain?...
asked 55 minutes ago -
How many unique codes are possibly formed from two characters,
where the first character can be...
asked 25 minutes ago -
A concentration cell is built based on the reaction:
2H+ + 2e- ----> H2
The pH...
asked 21 minutes ago -
what is the ph of the following solutions?
150 g NH4CI dissolved into 10.0 mL of...
asked 32 minutes ago -
A projectile is launched with an initial speed of 40 m/s at an
angle of 25°...
asked 15 minutes ago -
1. Using a function, display the customer who has the highest
credit limit. Display the customer...
asked 23 minutes ago -
A spatially uniform electric field varies in time according
to E = Eo + 3000 t,...
asked 49 minutes ago -
An electric power station that operates at 25 kV and uses a 20:1
step-up ideal transformer...
asked 42 minutes ago -
1. If 0.02% of a 0.6 M weak acid ionizes in a solution, what is
the...
asked 29 minutes ago -
The College of Business at Northeast College is accumulating
data as a first step in the...
asked 34 minutes ago