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- If a Japanese car costs 1,500,000 yen, a similar American car costs $30,000, and a dollar can buy 100 yen, what are the nominal and real exchange rates?Toyota sells Camrys in the U.S. for $23,000 when the exchange rate is 80 JPY/USD. If the exchange rate rises to 90¥ per dollar, what price would Toyota have to charge to receive the same amount of yen as before? $25,875 $25,553 $20,444Abigail lives in the UK and earns 40,000 pounds sterling per year. Her friend Barry lives in Japan and earns 8 million Japanese yen per year. The cost of a standardised consumption basket is 400 pounds sterling in the UK and 100,000 yen in Japan. The nominal exchange rate is Xy/s = 200, that is, one pound sterling can be exchanged for 200 Japanese yen Is the pound sterling overvalued or undervalued compared to the Japanese yen? Explain you calculations..
- On May 1, 2XX3, a bundle of goods in China costs 5,000,000 yuan, while the same goods cost $60,000 in the United States. Over the next year, inflation in the U.S. is expected to be 3%, while inflation in China is expected to be 5%. Which of the following statements is true? A. In one year the exchange rate is $84.9515/yuan and the dollar has appreciated against the yuan. B. In one year the exchange rate is $0.0118/yuan and the dollar has appreciated against the yuan. C. In one year the exchange rate is $84.9515/yuan and the dollar has depreciated against the yuan. D. In one year the exchange rate is $0.0118/yuan and the dollar has depreciated against the yuan. E. In one year the exchange rate is 84.9515yuan/$ and the dollar has depreciated against the yuan.Suppose a U.S. firm purchases some Chinese handicrafts. The china costs 1,000 Chinese yuan. At the exchange rate of $1.00 = 6.2 yuan, the dollar price of the goods is:Suppose you exported something from Mexico to the US and were quoted a price (payable immediately) of 20,000 Pesos. What would your receipt in US dollars be? _____________.
- Lost Pigeon Aviation, a U.S. company, produces and exports industrial machinery overseas. It recently made a sale to a Japanese manufacturing firm for ¥694 million, but the Japanese firm has 60 days before it must make the payment to Lost Pigeon Aviation The spot exchange rate is ¥132.78 per dollar, and the 60-day forward rate is ¥134.72 per dollar. Is the yen selling at a premium or at a discount in the forward market relative to the U.S. dollar? The yen is trading at a discount in the forward market. In the forward market, the yen is trading at a premium.Early in June 1983, it took 245 Japanese yen toequal $1. In August 2017, that exchange rate had fallen to 109 yen to $1. Assume that theprice of a Japanese-manufactured automobile was $9,000 in June 1983 and that its pricechanges were in direct relation to exchange rates.a. Has the price, in dollars, of the automobile increased or decreased during the 34-yearperiod because of changes in the exchange rate?b. What would the dollar price of the automobile be in August 2017, again assuming thatthe car’s price changes only with exchange rates?If the current USDJPY exchange rate is 135.00 Japanese yen per U.S. dollar, the price of a Big Mac hamburger in the United States is $3.41, and the price of a Big Mac hamburger in Japan is 380 yen, then other things equal, the Big Mac hamburger in Japan is ______________ (over-valued; under-valued; fairly-valued).
- Suppose a U.S. firm buys $200,000 worth of stereo speaker wire from a Mexican manufacturer for delivery in 60 days with payment to be made in 90 days (30 days after the goods are received). The rising U.S. deficit has caused the dollar to depreciate against the peso recently. The current exchange rate is 5.50 pesos per U.S. dollar. The 90-day forward rate is 5.45 pesos/dollar. The firm goes into the forward market today and buys enough Mexican pesos at the 90-day forward rate to completely cover its trade obligation. Assume the spot rate in 90 days is 5.30 Mexican pesos per U.S. dollar. How much in U.S. dollars did the firm save by eliminating its foreign exchange currency risk with its forward market hedge?In Japan, Honda’s export price per vehicle was 5 million yen when the exchange rate was 125 yen per US dollar ($). The expected inflation rate in the Japanese yen for next year is 1%. The standard inflation rate in the US is 3%. Honda is actively trying to limit the passing exchange rate changes in prices to 60% of annual changes (i.e., if, for example, the US dollar depreciates by 10% against the yen, Honda will consider depreciation of the US dollar by only 6% (=0.60*10%) to calculate the new prices of its vehicles in US dollars). What was the price in $ of a Honda at the beginning of the year? Considering purchasing power parity, what would be the expected exchange rate between the yen and the US dollar at the end of the year Assuming Honda wants to pass 60% of exchange rate changes to the vehicle price, what would be the price of a Honda vehicle at the end of next year in US dollars ($)?IF 2b Your Canadian company processes raw sugar for sale in the United States, and thefirm has just received a container of raw material from the UK. You have an invoicethat asks you to pay £20,000 in 30 days. The current exchange rate is $1.75/£. b. If you thought the dollar would trade at $2.0/£ in 30 days, what should you do?