国际金融英文版习题Chapter-3

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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_________.

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=0.7191

2.12.2x(105.3/110.5)=12.2x.9529=11.6259

3.B(0.7/.75)–1=-6.67%

4.D(1/12.2)/(1/11.8)–1=-3.28%

5.550

6.360

7.550/910=60.44%

8.360/910=39.56

9.(0.70/0.75)(60.44%)+(12.2/11.8)(39.56%)=.5641+0.4090=.9731=97.31%

10.weaker,becausedollardepreciatedby2.69%.

11.SinceS￥/$S$/SFrSSFr/￥=80x1/0.8900x1/95.00=0.946186<1,thereisanarbitrageopportunity.

Steps:①Buy¥fromDeutscheBank,SFr10millionx95.00=¥950million

②Buy$fromFuji