Foreign Exchange Market

Rate = Canadian rate Mexican pesos? Japanese Yen ? French Francs ?

26. A financial manager has detrermined that the appropriate rate discount for a foreign project is 17 percent. However, that discount rate applies in the United States using dollars. What discount rate should be used in the foreign country using the foreign currency? The inflation rate in the United States and in the foreign country is expected to be 3 percent and 8 percent, respectively.

10. Find the value of one U.S. dollar in a foreign currency. You might choose the Euro, the Japanese Yen, the Canadian dollar, or another currency. List the type of currency and the current value of the U.S. dollar in that country. (1.0 points) TIP: http://www.google.com/finance/converter is a good resource for foreign currency information.

I hope you have enjoyed this simple explanation of international trade and foreign exchange rates as it pertains to the current U.S. macro economy.

10. Find the value of one U.S. dollar in a foreign currency. You might choose the Euro, the Japanese Yen, the Canadian dollar, or another currency. List the type of currency and the current value of the U.S. dollar in that country. (1.0 points) TIP: http://www.google.com/finance/converter is a good resource for foreign currency information.

(TCO E) Suppose the Canadian dollar (C$) price of one British pound is C$2.12. A hotel room in London costs 120 pounds, while a similar hotel room in Toronto costs C$250. In which city is the hotel room cheaper, and by how much?

| (TCO E) Suppose the Indian rupee price of one British pound is 54.392 rupees for each pound. A hotel room in London costs 120 pounds, while a similar hotel room in New Delhi costs 6,500 Indian rupees. In which city is the hotel room cheaper, and by how much?

On the other hand, the peso devaluation will not have that much of a positive effect on Farmington (Antilles) N.V. as the peso depreciates relative to the USD. The result is the subsidiary being negatively impacted as the USD/peso exchange rate is rising, as they convert revenue earned in pesos to USD to deposit into U.S. bank accounts. This facility had almost 4 million MXN receivables at the end of the year. The 1994 average exchange rate is 3.5 MXN/USD, where these 4 million MXNs would equate to approximately 1.14 million USD. When the exchange rate values the devalued peso at 5.0 MXN/USD, these 4 million MXNs are only equal to 0.80 million USDs, showing a loss of more than 300,000 USDs. When the exchange rate changes from 4.0 to 5.0 MXN/USD, we can see the loss the company would experience, and thus the negative impact on this facility.

5. I want to make 10 headbands / pair clips and the ingredients cost me $39/10=$3.9. So, it costs me $3.9 to make each clips/ headache and if I sell them for $6.5 each, I make 2.6 on each pair of clips or headbands

If she wishes to protect the firm against an unfavorable increase in interest rates she could: A) sell an interest rate futures contract of a similar maturity to the loan. B) buy an interest rate futures contract of a similar maturity to the loan. C) swap the adjustable rate loan for another of a different maturity. D) none of the above 13) A U.S. investor makes an investment in Britain and earns 14% on the investment while the British pound appreciates against the U.S. dollar by 8%. What is the investor 's total return? A) 22.00% B) 23.12% C) 6.00% D) 4.88% 14) The Mexican government sold $1bn century bonds, with a maturity of 100 year, in Europe in 2010. The bond is classified as _______? A) foreign bond B) Eurobond C) domestic bond

On January 13, 1986 Dozier Industries, an American based firm, received notice that a bid on a project in the United Kingdom had been accepted. The project was to bring in £1,175,000 in revenue. Therefore, the revenue received for this project will need to be transferred into US dollars. When Dozier issued the bid on December 3, 1985 the project the exchange rate was $1.4820/£. This rate would have provided Dozier with the desired 6% profit on the project. On January 13, the day the bid was accepted, the exchange rate had changed to $1.4480/£. On January 14 the rate had change again to $1.4370/£. This inflation in the dollar to the British pound has severe implications for the profit potential on this

B. Suppose an American exporter has just received a payment of € 100,000, how many dollars will result upon conversion?

2. At the current spot rate (ask) of 236.90 this converts to $ $102,401,117.83 This is the present value of the yen cash flows at 7.1%. RJR’s dollar payments are then set at 10.92% of this value. These numbers are shown below:

including distributors and suppliers. From the person who gets original wood from a tree to the

Bob O’Connors sentía que la valorización de US$ 6 millones que hizo Walnut para su empresa RBS era baja, pues desde su punto de vista un precio más real era en torno a los US$ 8 – 10 millones.