An iPhone 13 costs $600 in the United States. Today, forex exchange rates were identified at: · S1 = €2.25 · €1 = P43 What should be the price of the same iPhone 13 in Philippines, assuming that the currency markets are efficient and purchasing power parity holds?
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· S1 = €2.25
· €1 = P43
What should be the price of the same iPhone 13 in Philippines, assuming that the currency
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- Suppose the current spot exchange rate for the Chinese yuan is USD 0.15 per CNY. If the domestic prices of traded goods rise 70% over the next 10 years in China and 20% over the same period in the United States, then, according to the relative purchasing power parity hypothesis, the spot exchange rate for the yuan in 10 years will be approximately:Suppose the current spot exchange rate for the Chinese yuan is USD 0.15 per CNY. If the domestic prices of traded goods rise 70% over the next 10 years in China and 30% over the same period in the United States, then, according to the relative purchasing power parity hypothesis, the spot exchange rate for the yuan in 10 years will be approximately: USD 0.35 per CNY USD 0.60 per CNY USD 0.11 per CNYCountries A and B are identical in all respects, except that the initial net international asset position (b0) of country A is less than that of B, indicates if the statements are true false or uncertain, and explains why: a) the consumption in country A is less than the consumption in country B. B) The trade balance of country A in period 1 is greater than that of country B. c) The current account in country A in period 2 is higher than in country B. d) All of the above statements are true.
- A US firm exporting to Mexico has set a price of MXN 2000 for a product with variable cost of $60. At an exchange rate of MXN 20/USD 1, per unit contribution is $40. What is the impact on per unit contribution if the exchange rate changes to MXN 25/USD 1, all else being equal? decrease 25% increase 50% increase 25% no change decrease 50%The current spot exchange rate is $1.95/£ and the three-month forward rate is $1.90/£. Based on your analysis of the exchange rate, you are pretty confident that the spot exchange rate will be $1.92/£ in three months. Assume that you would like to buy or sell £1,000,000 Calculate the expected dollar profit....Assume Turkish lira (TL) is expected to depreciate by 10% over the next year against US dollar. If the Turkish interest rate is15%, what would be the US interest rate that can make a Turkish investor to be willing to buy US securities today? Assume capital is perfectly mobile between Turkey and US.
- Due to the integrated nature of their capital markets, investors in both the United States and the U.K. require the same real interest rate, 2.5 percent, on their lending. There is a consensus in capital markets that the annual inflation rate is likely to be 3.5 percent in the United States and 1.5 percent in the U.K. for the next three years. The spot exchange rate is currently $1.50 per £. Required: Compute the nominal interest rate per annum in both the United States and the U.K., assuming that the Fisher effect holds. What is your expected future spot dollar-pound exchange rate in three years from now? Can you infer the forward dollar-pound exchange rate for one-year maturity?Assume the exchange rate is 20 pesos for a dollar. The dollar is expected to depreciate to 15 pesos for a dollar. An investor exchanges an unspecified amount of dollars for pesos. Then, once the dollar has depreciated, the investor converts his pesos into dollars. The investor earns a profit of $7. The original amount of dollars exchanged for pesos wasSuppose that the current exchange rate is 1.50 = £1, but it is expected to be 1.35 = £1in one year. If the current interest rate on a one-year government bond in the United Kingdom is 4%, what does the interest-rate parity condition indicate the interest rate will be on a one-year government bond in Germany? Assume that there are no differences in risk, liquidity, taxation, or information costs between the bonds.
- Other factors being constant, a lower than expected inflation rate in the U.S will result in dollar depreciation and foreign currency appreciation. True or FalseSuppose you are a British venture capitalist holding a major stake in an e-commerce start-up in Silicon Valley. As a British resident, you are concerned with the pound value of your U.S. equity position. Assume that if the American economy booms in the future, your equity stake will be worth $901, and the exchange rate will be $1.28/£. If the American economy experiences a recession, on the other hand, your American equity stake will be worth $817, and the exchange rate will be $1.43/£. You assess that the American economy will experience a boom with a 50 percent probability and a recession with the remaining probability.Estimate the expected value of the property in GBP (as XXX.XXX)Suppose that today is 1st January 2022, Anthony Tan is interested in hiring a software engineer from Malaysia for his company Grab in the United States by using a 3-month short-term contract to control and monitor the mobile app development. The current exchange rate between US Dollars and Malaysian Ringgit (RM) is:1 USD equals RM 4.12. (i) What should Anthony Tan do to manage the international exposure from operational, if, in March 2022, the exchange rate is 1 USD = RM 4.25? (ii) What should Anthony Tan do to manage the international exposure from operational, if, in June 2022, the exchange rate is USD 1 = RM 3.98?