International Finance Problems Essay

Expected wait time in the system for an application in Region 1 is approximately 37 days, with actual processing time of 14.10 hours. This is where the bottleneck occurs as it takes the evaluation team over 16 days out of the 37 to perform the review of 78 applications.

The size of financial flows out of Australia The level of financial flows out of Australia will also be determined by the domestic interest rates relative to overseas as well as international confidence in Australia and other economies. If Australian interest rates are relatively lower and the confidence in the Australian economy has deteriorated, capital outflow will increase, thus increasing the supply of AUD. At the present, interest rates are at low levels, however they are expected to rise in the near future as economic confidence and growth are relatively high. This means there will not be a large increase in the supply of Australian dollars.

23. When a U.S. tourist in Japan goes to a bank to convert her dollars into Japanese yen, the

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.

One needs to have a base level understanding of what defines an exchange rate. According to Investopedia, a foreign exchange rate is “The price of one country's currency expressed in another country's currency. In other words, the rate at which one currency can be exchanged for another.”(Investopedia, 2012) The process by which foreign exchange rates are determined is really not any different than any other

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.

So if you were using a yen/dollar quote for the exchange rate, you would have yen rate minus dollar rate divided by one plus dollar rate.

So, in this case, it would take fewer dollars to purchase the same amount of Japanese Yen, U.S. goods become more expensive to Japanese buyers, and Japanese goods become cheaper to U.S. buyers.

Life insurance is meant to provide funds to replace a breadwinner's to protect and support dependents. Chad and Haley are dependents, not income providers. Therefore, the purchase of life insurance is unnecessary and not recommended. The Dumonts should use the money they would spend on policies for the children to increase their own coverage.

Which is cost difference determines the patterns of international trade. Absolute advantage is trade benefits when each country is at least cost producer of one of the goods being traded. In the 1800s, David Ricardo developed the theory of comparative advantage to measure gains from trades. This theory is based on comparative advantage and it states each nation should specialize in production of those goods for which its relatively more efficient with a lower opportunity cost.

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:

• Borrow CAD 96 Million @ 2.70% p.a.• Buy USD @ CAD 1.5995 / USD• CAD 96 Million → USD 60,018,756• Deposit USD 60,018,756 @ 1.65% p.a.• Arranging six-month Forward Contracts @ USD 0.6271 / CAD