Homework Answers
Canadian dollar's spot rate =Current Spot Rate*(1+US Inflation
Rate)/(1+Canadian inflation rate)
=0.7955*(1+2.41%)/(1+2.63%)=0.7938
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The U.S. inflation rate is 2.41% annualized, and the Canadian inflation rate is 2.63% annualized. Today's spot rate...
The 1-year forward rate of the Canadian dollar contains a 5.01% discount. Today's spot rate of...
The 1-year forward rate of the Canadian dollar contains a 5.01% discount. Today's spot rate of the Canadian dollar is $0.7255. Use the forward rate model to predict the exchange rate for one year ahead. Round to four decimals. Include the price currency. Example 1.1234($) or 1.1234(CS)
One year ago the spot rate of U.S. dollars for Canadian dollars was $0.92/C$1. Since that time the rate of inflatio...
One year ago the spot rate of U.S. dollars for Canadian dollars was $0.92/C$1. Since that time the rate of inflation in the U.S. has been 4% greater than that in Canada. Based on the theory of Relative PPP, the current spot exchange rate of U.S. dollars for Canadian dollars should be approximately: $0.9568/C$. $0.9672/C$. $1.0400/C$. $0.9776/C$
The spot rate of euro against US$ is $1.4250/€. The rate of inflation in the U.S....
The spot rate of euro against US$ is $1.4250/€. The rate of inflation in the U.S. and Euro area are expected to be 3% and 2.5% respectively. Based on the theory of Relative PPP, the expected spot exchange rate of euro against the US$ for next year is ____________.
Suppose the spot exchange rate for the Canadian dollar is Can$1.07 and the six-month forward rate...
Suppose the spot exchange rate for the Canadian dollar is Can$1.07 and the six-month forward rate is Can$1.09. a. Which is worth more, a U.S. dollar or a Canadian dollar? O U.S. dollar Canadian dollar b. Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is Can$2.60? (Round your answer to 3 decimal places, e.g., 32.161.) Cost in U.S. dollars c. Is the U.S. dollar selling at a...
Suppose the spot exchange rate for the Canadian dollar is Can$1.12 and the six-month forward rate...
Suppose the spot exchange rate for the Canadian dollar is Can$1.12 and the six-month forward rate is Can$1.17. (Enter your answers as directed, but do not round intermediate calculations.) a. Which is worth more, a U.S. dollar or a Canadian dollar? b. Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is Can$2.49? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)...
PPP - Purchasing Power Parity Suppose that the current Swiss franc to U.S. dollar spot exchange...
PPP - Purchasing Power Parity Suppose that the current Swiss franc to U.S. dollar spot exchange rate is $:SFr = 1.60 (i.e., 1.60 SFr per U.S. dollar or 1.60 SFr/$). The expected inflation over the coming year is 2% in Switzerland and 5% in the US. According to the purchasing power parity, what is the expected value of the Swiss franc to U.S. dollar spot exchange rate a year from now?
27. o 28. O 29. 0 30. 0 Suppose in the spot market 1 U.S. dollar...
27. o 28. O 29. 0 30. 0 Suppose in the spot market 1 U.S. dollar equals 1.3750 Canadian dollars. 6-month Canadian securities have an annualized return of 6% (and thus a 6-month periodic return of 3%). 6-month U.S. securities have an annualized return of 6.5% and a periodic return of 3.25%. If interest rate parity holds, what is the U.S. dollar Canadian dollar exchange rate in the 180 day forward market? In other words, how many Canadian dollars are...
Assume the following information about the U.S. and New Zealand: U.S. N.Z. Inflation Rate 1.0% 3.0%...
Assume the following information about the U.S. and New Zealand: U.S. N.Z. Inflation Rate 1.0% 3.0% Interest Rate 5.0% 8.0% NZ Spot NZ1 = $0.6204 According to the International Fisher Effect, what is the expected spot rate of the New Zealand dollar in one year? Round your answer to four decimals and no currency signs. Answer:
Question 9 (1 point) Suppose that on January 1, 1987, the spot rate on the Dutch...
Question 9 (1 point) Suppose that on January 1, 1987, the spot rate on the Dutch guilder was $0.39 and the 180day forward rate was $0.40. The difference between the spot and forward rates suggested that Question 9 options: a) the guilder had risen in relation to the dollar b) the inflation rate in the Netherlands was declining c) interest rates were higher in the U.S. than in the Netherlands d) the guilder was expected to fall in value relative...
Suppose that S = $1.1045/€. The annualized inflation rates are 4% and 2.75% in the U.S...
Suppose that S = $1.1045/€. The annualized inflation rates are 4% and 2.75% in the U.S and Germany, respectively. Find the exact spot rate in one year. Do not write any symbol. Make sure to round your answers to the nearest 10000th decimal points.
The 1-year forward rate of the Canadian dollar contains a 5.01% discount. Today's spot rate of the Canadian dollar is $0.7255. Use the forward rate model to predict the exchange rate for one year ahead. Round to four decimals. Include the price currency. Example 1.1234($) or 1.1234(CS)
One year ago the spot rate of U.S. dollars for Canadian dollars was $0.92/C$1. Since that time the rate of inflation in the U.S. has been 4% greater than that in Canada. Based on the theory of Relative PPP, the current spot exchange rate of U.S. dollars for Canadian dollars should be approximately: $0.9568/C$. $0.9672/C$. $1.0400/C$. $0.9776/C$
Suppose the spot exchange rate for the Canadian dollar is Can$1.07 and the six-month forward rate is Can$1.09. a. Which is worth more, a U.S. dollar or a Canadian dollar? O U.S. dollar Canadian dollar b. Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is Can$2.60? (Round your answer to 3 decimal places, e.g., 32.161.) Cost in U.S. dollars c. Is the U.S. dollar selling at a...
Suppose the spot exchange rate for the Canadian dollar is Can$1.12 and the six-month forward rate is Can$1.17. (Enter your answers as directed, but do not round intermediate calculations.) a. Which is worth more, a U.S. dollar or a Canadian dollar? b. Assuming absolute PPP holds, what is the cost in the United States of an Elkhead beer if the price in Canada is Can$2.49? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)...
27. o 28. O 29. 0 30. 0 Suppose in the spot market 1 U.S. dollar equals 1.3750 Canadian dollars. 6-month Canadian securities have an annualized return of 6% (and thus a 6-month periodic return of 3%). 6-month U.S. securities have an annualized return of 6.5% and a periodic return of 3.25%. If interest rate parity holds, what is the U.S. dollar Canadian dollar exchange rate in the 180 day forward market? In other words, how many Canadian dollars are...
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