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- The USA interest rate is 5% and the nominal exchange rate between the euro and the US dollar, E€/$, is 0.94. As the Ukraine crisis continues and the price of energy is expected to increase further, the financial markets expect a 14% depreciation of the euro in the following year. How much (euro) will a European investor earn, if today she invests 1 euro in a one-year USA bond?6) [Above chart shows the exchange rate between USD and euro the during the last five years – it shows price of 1 euro in USD; how much 1 euro is worth in USD. On April 3, 2020, the rate was 1 euro = 1.08 USD. On May 28, 2021, the rate was 1 euro = 1.22 USD. Using what you learned in this course, state which currency appreciated, and which currency depreciated between these two dates (4/3/2020 and 5/28/2021)?4. Before 12th August 2005, the US Dollar (USD) was trading at 8.20 Renminbi yuan per dollar (RMB, China’s official currency) in the financial market of China. After that date, the USD was trading at only 7.50 RMB yuan per dollar in China. (1) If you received $100 US dollars from your friend in New York in July 2005, hold it for half a year and finally exchange it for RMB in Chengdu in late January 2006, how much value in RMB would you lose? (2) What is the percentage change in the US Dollar’s value?
- The ECU as a basket of currencies. What is the percentage/weight of the ECU's total value accounted by the Spanish peseta? Refer to Exhibit 3.4 in the text. Would you get a different result if you valued the ECU in Japanese yen instead of the U.S. dollar? Would you expect this weight to change if the ECU depreciates by 10 percent against the U.S. dollar? For reference (image included)Suppose the GDP of Honduras is 100,000 lempiras and the exchange rate between Honduran currency lempiras and USD is 20 lempira=$1. What is the GDP of Honduras when measured in USD?The U.S. dollar exchange rate increased from $0.96 Canadian in June 2011 to $1.03 Canadian in June 2012, and it decreased from 81 Japanese yen in June 2011 to 78 yen in June 2012. 1. Did the U.S. dollar appreciate or depreciate against the Canadian dollar? Did the U.S. dollar appreciate or depreciate against the yen? 2. What was the value of the Canadian dollar in terms of U.S. dollars in June 2011 and June 2012? Did the Canadian dollar appreciate or depreciate against the U.S. dollar over the year June 2011 to June 2012? 3. What was the value of 100 yen in terms of U.S. dollars in June 2011 and June 2012? Did the yen appreciate or depreciate against the U.S. dollar over the year June 2011 to June 2012?
- In mid-2006, a British pound sterling (the monetary unit in the United Kingdom) was worth 1.4 euros (the monetary unit in the European Union). If a U.S. dollar bought 0.55 pound sterling in 2006, what was the exchange rate between the U.S. dollar and the euro?In 2018, the exchange rate was ¥6.8755=$1. Convertthe China GDP of ¥90,000 trillion in 2018 with the U.S.GDP of $20,500 trillion for the same year.Other things being equal, an increase in a country's interest rates will cause its currency to depreciate. True False If the U.S. dollar had a value equal to 1 euro a year ago and is now worth 1.2 euros, we say that the euro has appreciated over the past year. True False
- Accel Co. produces a standard tennis racket in the Netherlands and sells it online to consumers in the United States. This racket competes with a tennis racket produced by Malibu Co. in the United States, which is of similar quality and is priced at about $140. Accel has set the price of its tennis racket at 100 euros. Assuming that the euro's exchange rate (during the sales month in question) was $1.60, then the price of Accel's racket to U.S. consumers is $_________ (enter a whole number). Because U.S. consumers could buy a Malibu racket for only $140, Accel only sold about 1,000 rackets to U.S. consumers in that month. Since then, however, the euro's value has weakened; this month, the euro's exchange rate is only $1.20. U.S. consumers can now purchase the Accel tennis racket for $_________(enter a whole number), which is less than that charged for the U.S. Malibu racket. In this month, Accel sold 5,000 rackets. The U.S. demand for this tennis racket is price-elastic (sensitive to…Suppose we consider two countries, a home country and a foreign country. In the home country, the expected inflation rate is equal to 3.6 per cent, while the expected inflation rate abroad is equal to 4.2 per cent. Furthermore, it is known that the nominal interest rate in the home country is equal to 3.4 per cent, while the nominal interest rate abroad is equal to 4 per cent.a) First explain what is meant by absolute purchasing power parity, relative purchasing power parity and uncovered nominal interest rate parity. Then give an estimate of the expected growth in the nominal exchange rate based on each of the three theories. Finally, show that if both relative purchasing power parity and uncovered nominal interest rate parity apply, real interest rates in the two countries will be approximately equal.The nominal exchange rate is the price of one currency in terms of another currency. A nominal exchange rate specifies how many units of one country's currency are needed to buy one unit of another country's currency. Suppose the following table presents nominal exchange rate data for May 21, 2019, in terms of U.S. dollars per unit of foreign currency. Use the information in the table to answer the questions that follow. Foreign Currency Cost of One Unit of Foreign Currency (Dollars) Brazilian real (BRL) 0.3666 Canadian dollar (CAD) 0.8493 Euro (EUR) 1.3288 Japanese yen (JPY) 0.009748 Mexican peso (MXN) 0.0889 United Kingdom pound (GBP) 1.8965 Suppose that on May 21, 2019, a marble statue handmade in Brazil is priced at BRL 2,750. The approximate U.S. dollar price of the statue would be . If the nominal exchange rate for the U.S. dollar–euro rises from $1.3288 to $1.52812 per euro, the euro in value, or , relative to the U.S. dollar.