What is the percentage change in price for an American importer of Indian sitar music cassettes if the Indian rupee/U.S. dollar exchange rate goes from 12 rps./$ to 14rps./$ and the price of a cassette is 50 rupees? A) −16.7% B) −14.4% C) +20.2% D) +16.5% E) +14.2% ANSWER B
Date: September 19th, 2020
Suppose the quote on pounds was $1.624-31. If you converted $10,000 to pounds and then back to dollars, how many dollars would you end up with? What will be an ideal response? ANSWER Answer: For $10,000, you would buy pounds at the asking price. Given this quote, the asking price would be $1.631/£. […]
Date: September 19th, 2020
On December 3,2001, spot Japanese yen were sold at $0.008058. Suppose the 180-day forward Japanese yen was selling at a 1.91% annualized premium, what is the 180-day forward rate of the yen? A) 0.008245 B) 0.008135 C) 0.008457 D) 0.008550 ANSWER Answer: B
Date: September 19th, 2020
Suppose the spot quote on the euro is $0.9302-18, and the spot quote on the Swiss franc is $0.6180-90. What is the direct spot quote for the Swiss franc in Frankfurt? What will be an ideal response? ANSWER Answer: In order to sell one franc for euros, first you would sell the franc […]
Date: September 19th, 2020
From the perspective of the MNC, the most important purpose of the forward markets is the process of ________. A) hedging B) arbitraging C) speculating D) preventing default ANSWER Answer: A
Date: September 19th, 2020
Suppose the U.S. imposes import restrictions on Japanese cars. What is likely to happen to the U.S. current-account deficit? What will be an ideal response? ANSWER Answer: Nothing will happen to the U.S. current account deficit, unless the import restrictions cause a change in savings or investment behavior. Absent these changes, which are […]
Date: September 19th, 2020
Carol plans to visit Japan next week and wishes to convert $1,000 U.S. into yen to cover her travel expenses. If her travel agent quotes her an exchange rate of 115¥/$, how many yen will she obtain? A) 115,000 B) 110,000 C) 150,000 D) 5.0 E) 8.7 ANSWER A
Date: September 19th, 2020
Which of the following is one of the financial statements critical to financial statement analysis? A) 8-K B) SEC registration statement C) Disclosure D) 10-Q E) Statement of Cash Flows ANSWER E
Date: September 19th, 2020
How much of the probability distribution of future spot rates is between plus or minus two standard deviations? A) 95.44% B) .167% C) 98% D) 4.55% ANSWER Answer: A
Date: September 19th, 2020
What is meant by the conditional future spot rate? A) the forward rate B) the forecasted future spot rate C) the conditional variance of the probability distribution of future spot rates D) the conditional mean of the probability distribution of future spot rates ANSWER Answer: D
Date: September 19th, 2020
