国际金融英文版习题Chapter

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INTERNATIONALFINANCE

AssignmentProblems<3>Name:Student#:

I.Choosethecorrectanswerforthefollowingquestions<onlyONEcorrectanswer><2creditsforeachquestion,totalcredits2x25=50>

1.InterbankquotationsthatincludetheUnitedStatesdollarsareconventionallygivenin__________,whichstatetheforeigncurrencypriceofoneU.S.dollar,suchasabidpriceofSFr0.85/$.

A.indirectquote

B.directquote

C.Americanquote

D.Europeanquote

2.Thespotexchangeratepublishedinfinancialnewspapersisusuallythe__________.

A.nominalexchangerate

B.realexchangerate

C.effectiveexchangerate

D.equilibriumexchangerate

3.Theforeignexchangereferstothe__________.

A.foreignbanknotesandcoins

B.demanddepositsinforeignbanks

C.foreignsecuritiesthatcanbeeasilycashed

D.alloftheabove

4.Thefunctionsoftheforeignexchangemarketcomedownto__________.

A.convertingthecurrencyofonecountryintothecurrencyofanother

B.providingsomeinsuranceagainsttheforeignexchangerisk

C.makingtheforeignexchangespeculationeasy

D.OnlyAandBaretrue.

5.WhichofthefollowingisNOTtrueregardingtheforeignexchangemarket?

A.Itistheplacethroughwhichpeopleexchangeonecurrencyforanother.

B.Theexchangeratenowadaysismainlydeterminedbythemarketforces.

C.Mostforeignexchangetransactionsarephysicallycompletedinthismarket.

D.Alloftheabovearetrue.

6.Theworldlargestforeignexchangemarketsare__________respectively.

A.London,NewYorkandTokyo

B.London,ParisandFrankfurt

C.London,HongKongandSingapore

D.London,ZurichandBahrain

7.TheforeignexchangemarketisNOTefficientbecause__________.

A.monetaryauthoritiesdominatetheforeignexchangemarketandeverybodyknowsthatbydefinition,centralbanksareinefficient

B.commercialbanksandotherparticipantsofthemarketdonotcompetewithoneanotherduetothefactthattransactiontakesplacearoundtheworldandnotinasinglecentralizedlocation

C.foreignexchangedealershavedifferentpricessuchasbidandaskprices

D.Noneofthereasonslistedarecorrectbecausetheforeignexchangemarketisanefficientmarket

8.__________earnaprofitbyabid-askspreadoncurrenciestheybuyandsell.__________ontheotherhand,earnaprofitbybringingtogetherbuyersandsellersofforeignexchangesandearningacommissiononeachsaleandpurchase.

A.Foreignexchangebrokers;foreignexchangedealers

B.Foreignexchangedealers;foreignexchangebrokers

C.arbitragers;speculators

D.commercialbanks;centralbanks

9.MostforeignexchangetransactionsarethroughtheU.S.dollars.Ifthetransactionisexpressedasthecurrenciesperdollar,thisisknownas__________whereas__________areexpressedasdollarspercurrency.

A.directquote;indirectquote

B.indirectquote;directquote

C.Europeanquote;Americanquote

D.Americanquote,Europeanquote

10.FromtheviewpointofaJapaneseinvestor,whichofthefollowingwouldbeadirectquote?

A.SFr1.25/€

B.$1.55/₤

C.¥110/€

D.€0.0091/¥

11.Whichofthefollowingistrueabouttheforeignexchangemarket?

A.Itisaglobalnetworkofbanks,brokers,andforeignexchangedealersconnectedbyelectroniccommunicationssystem.

B.Theforeignexchangemarketisusuallylocatedinaparticularplace.

C.Theforeignexchangeratesareusuallydeterminedbytherelatedmonetaryauthorities.

D.Themainparticipantsinthismarketarecurrencyspeculatorsfromdifferentcountries.

12.Theextenttowhichtheincomefromindividualtransactionsisaffectedbyfluctuationsinforeignexchangevaluesisconsideredtobe_________.

A.Translationexposure

B.economicexposure

C.transactionexposure

D.accountingexposure

13.Whichofthefollowingexchangeratesisadjustedforpricechanges?

A.nominalexchangerate

B.realexchangerate

C.effectiveexchangerate

D.equilibriumexchangerate

14.SupposetheexchangerateoftheRMBversusU.S.dollaris¥6.8523/$now.IftheRMBweretoundergoa10%depreciation,thenewexchangerateintermsof¥/$wouldbe:

A.6.1671B.7.5375C.6.9238D.7.6135

15.AtleastinaU.S.MNC’sfinancialaccountingstatement,ifthevalueoftheeurodepreciatesrapidlyagainstthatofthedollaroverayear,thiswouldreducethedollarvalueoftheeuroprofitmadebytheEuropeansubsidiary.Thisisatypical__________.

A.transactionexposure

B.translationexposure

C.economicexposure

D.operatingexposure

16.AJapanese-basedfirmexpectstoreceivepound-paymentin6months.Thecompanyhasa<an>__________.

A.economicexposure

B.accountingexposure

C.longpositioninsterling

D.shortpositioninsterling

17TheexposuretoforeignexchangeriskknownasTranslationExposuremaybedefinedas__________.

A.changeinreportedowner’sequityinconsolidatedfinancialstatementscausedbyachangeinexchangerates

B.theimpactofsettlingoutstandingobligationsenteredintobeforechangeinexchangeratesbuttobesettledafterchangeinexchangerates

C.thechangeinexpectedfuturecashflowsarisingfromanunexpectedchangeinexchangerates

D.Alloftheabove

18Whenafirmdealswithforeigntradeorinvestment,itusuallyhasforeignexchangeriskexposure.SoifanAmericanfirmexpectstoreceiveadollar-paymentfromaChinesecompanyinthenext30days,theU.S.firmhasthepossible__________.

A.economicexposure

B.transactionexposure

C.translationexposure

D.noneoftheabove

19.Inordertoavoidthepossiblelossbecauseoftheexchangeratefluctuations,afirmthathasa__________positioninforeignexchangescan__________thatpositionintheforwardmarket.

A.short;sell

B.long;sell

C.long;buy

D.noneoftheabove

20.AforwardcontracttodeliverJapaneseyensforSwissfrancscouldbedescribedeitheras__________or__________,

A.sellingyensforward;buyingfrancsforward

B.buyingfrancsforward;buyingyensforward

C.sellingyensforward;sellingfrancsforward

D.sellingfrancsforward;buyingyensforward

21.DollarsaretradingatS0SFr/$=SFr0.7465/$inthespotmarket.The90-dayforwardrateisF1SFr/$=SFr0.7432/$.Sotheforward__________onthedollarinbasispointsis__________:

A.discount,0.0033

B.discount,33

C.premium,0.0033

D.premium,33

22.Ifthespotrateis$1.35/€,3-monthforwardrateis$1.36/€,whichofthefollowingisNOTtrue?

A.euroisatforwardpremiumby100points.

B.dollarisatforwarddiscountby100points.

C.dollarisatforwarddiscountby55points.

D.euroisatforwardpremiumby2.96%p.a.

23.IfthespotC$/$rateis1.0305/15,forwarddollaris25/30premium,theoutrightforwardquoteinAmericantermshouldbe__________.

A.1.0330–1.0345

B.1.0280–1.0285

C.0.9681–0.9667

D.0.9728–0.9723

24.IfthespotC$/$rateis1.0305/15,forwarddollaris25/30premium,the$/C$forwardquoteintermsofpointsshouldbe__________.

A.30/25

B.25/30

C.–<23/28>

D.–<28/23>

25.ThecurrentU.S.dollarexchangerateis¥85/$.Ifthe90-dayforwarddollarrateis¥90/$,thentheyenissellingataperannum__________of__________.

A.premium;5.88%

B.discount;5.56%

C.premium;23.52%

D.discount;22.23%

II.Problems

Questions1through10arebasedontheinformationpresentedinTable3.1.<2creditsforeachquestion,totalcredits2x10=20>

Table3.1

CountryExchangerateExchangerateCPIVolumeofVolumeof

<2008><2009><2008>exportstoU.SimportsfromU.S.

Germany€0.75/$€0.70/$102.5$200m$350m

MexicoMex$11.8/$Mex$12.20/$110.5$120m$240m

U.S.105.3

1.Therealexchangerateofthedollaragainsttheeuroin2009was__________.

2.Therealexchangerateofthedollaragainstthepesoin2009was__________.

3.Thedollarwas__________againsttheeuroinnominaltermby__________.

A.appreciated;6.67%

B.depreciated;6.67%

C.appreciated;7.14%

Ddepreciated;7.14%

4.TheMexicanpesowas__________againstthedollarinnominaltermby__________.

A.appreciated;3.39%

B.depreciated;3.39%

C.appreciated;3.28%

D.depreciated;3.28%

5.ThevolumeoftheGermanforeigntradewiththeU.S.was__________.

6.ThevolumeoftheMexicanforeigntradewiththeU.S.was__________.

7.AssumetheU.S.tradesonlywiththeGermanyandMexico.Nowifwewanttocalculatethedollareffectiveexchangeratein2009againstabasketofcurrenciesofeuroandMexicanpeso,theweightassignedtotheeuroshouldbe__________.

8.Theweightassignedtothepesoshouldbe__________.

9.Assumethe2008isthebaseyear.Thedollareffectiveexchangeratein2009was__________.

10.Wasthedollargenerallystrongerorweakerin2009accordingtoyourcalculation?

11.Thefollowingexchangeratesareavailabletoyou.

FujiBank¥80.00/$

UnitedBankofSwitzerlandSFr0.8900/$

DeutscheBank¥95.00/SFr

AssumeyouhaveaninitialSFr10million.Canyoumakeaprofitviatriangulararbitrage?Ifso,showstepsandcalculatetheamountofprofitinSwissfrancs.<8credits>

12.Ifthedollarappreciates1000%againsttheruble,bywhatpercentagedoestherubledepreciateagainstthedollar?<5credits>

13.Asapercentageofanarbitrarystartingamount,abouthowlargewouldtransactionscostshavetobetomakearbitragebetweentheexchangeratesSSFr/$=SFr1.7223/$,S$/￥=$0.009711/¥,andS￥/SFr=¥61.740/SFrunprofitable?Explain.<7credits

14.Youaregiventhefollowingexchangerates:

S￥/A$=67.05–68.75

S￡/A$=0.3590–0.3670

CalculatethebidandaskrateofS￥/￡:<5credits>

15.SupposethespotquotationontheSwissfranc<CHF>inNewYorkisUSD0.9442–52andthespotquotationontheEuro<EUR>isUSD1.3460–68.Computethepercentagebid-askspreadsontheCHF/EURquote.<5credits>

AnswerstoAssignmentProblems<3>

PartI

1.D

2.A

3.D

4.D

5.D

6.A

7.D

8.B

9.C

10.C

11.A

12.A

13.B

14.D

15.B

16.C

17.A

18.D

19.B

20.A

21.B

22.B

23.C

24.C

25.D

PartII

1.0.70x<105.3/102.5>=0.7x1.0273