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If PPP held exactly, then the yen would trade at one yen to the dollar. True or False?
Explain.
Step by step
Solved in 2 steps
- Based on the reading and the table above, is the exchange rate of dollars to pounds fixed or flexible? Explain your answer.Name three reasons that could explain the appreciation of the USD against the yen?In 2018, the yen went from $0.00887619 to $0.00906626. • By how much did the yen appreciate against the dollar? • By how much has the dollar depreciated against the yen?
- A. If $1.55 = 1 pound, what is the pound price of dollars? B. If $/pound = 1.6510 and $/Euro = 1.0131, what is pound/Euro? C. If s = $1.5204/pound and f = $1.5210/pound, which currency is at a forward premium? What is the magnitude of the forward premium? What is the magnitude of the forward discount?If the euro depreciates against the U.S. dollar, can a dollar buy more or fewer euros as aresult? Explain.Suppose the Japanese yen exchange rate is ¥122 = $1 and the British pound exchange rate is £1 = $1.53. Suppose the cross-rate is ¥140 = £1. If there is, what would be the profit of the mispricing?
- Suppose the Japanese yen exchange rate is ¥107 = $1 and the British pound exchange rate is £1 = $1.24. What is the cross-rate in terms of yen per pound?Suppose the real exchange rate is constant – say, at the level required for net exports (or the current account) to equal zero. In this case, if foreign inflation is higher than domestic inflation, what must happen to the nominal exchange rate over time?If the dollar is initially worth 120 yen and then the exchange rate changes so that the dollar is now worth 125 yen, the value of the yen has _______________. * Devaluation Depreciated Appreciated Revaluation
- If euros sell for $1.50 (U.S.) per euro, what should dollars sell for in eurosper dollar?If the euro is selling at a discount relative to the USD in the forward market, is the forward price of USD/EUR larger or smaller than the spot price of the USD/EUR? Group of answer choices a Larger b Smaller c Indeterminate d The same
