1- $/yen = .009, yen/pound = 120, $/pound = 1.15 a. Is there alignment of exchange rates? b. Will arbitrage take place? c. At what direction the arbitrage will take place? d. For an investor investing $1000000, what will be the gain? Only typed answer
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1- $/yen = .009, yen/pound = 120, $/pound = 1.15
a. Is there alignment of exchange rates?
b. Will arbitrage take place?
c. At what direction the arbitrage will take place?
d. For an investor investing $1000000, what will be the gain?
Only typed answer
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- how does "International Flow of Funds" have to do with printing and frbracation compaines? please type your answer.A US based exporter sells US made goods in UK. The revenue last year was £1,000. The cost of goods was $800. The spot exchange rate was $1.25 per £. What was the profit in dollars? $400 $300 $250. Pls sir very fast(a) Suppose a computer sells for US$1,200 in the U.S. and for £855 in London. If the exchange rate is £0.65 per dollar, is there any arbitrage (profit opportunity)? Explain (b). (not connected to part a). If the Euro price of one Canadian dollar was 0.770 in 2003 and the exchange rate adjusted to 1.176 Canadian dollar per Euro in 2004, did the Euro appreciate or depreciate against the Canadian dollar. Explain and show your computation.
- Suppose a Japanese car costs 150,000 yen, a similar American car costs $25,000, and a dollar can buy 80 yen. (a) What is the nominal exchange rate? (b) What is the real exchange rate? (c) Based on your answers above, does the purchasing-power-parity hold? Explain why or why not.Suppose a British investor is expected to receive payment of 150,000 dollars ($) in twelve months from a U.S. bank. The annual interest rate in dollar deposit is 5% and the annual interest rate in pound deposit is 10%. If the present exchange rate is 0.50 pound per dollar deposit and interest parity holds, then. (a) How many pounds does the British investor expect to receive at the maturity date of his U.S. investment? (Show the computation process). (b) How many pounds were initially invested? Fully explain all your answers (calculation).(a) If the exchange rate changes from $1.75 = £1 to $1.72 to £1; What does this mean for the dollar? For the pound? What if the exchange rate changes from $1.80 £1 to $1.84 £1? (b) How will a depreciation of the dollar affect the US net export?
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- If the U.S. dollar appreciates relative to the Euro then, (all else constant) A) U.S. exports will increase B) U.S. imports will increase C) No change in U.S. imports or exports will occur D) All are possible3. What will happen to a country that fixes the price of foreign exchange below equilibrium?(A) Government spending rises to 1,250. Compute the investment, trade balance, national savings and the equilibrium exchange rate and illustrate graphically. (B) Suppose that the world interest rate rises from 5 to 10 percent (G is again 1,000). Solve for national saving, investmentm trade balance and the equilibrium exchange rate. Explain what you find compared to part (A) and explain graphically.