Suppose it is January 1, 1994, and the Deutsche mark revalues from $0.31 at the beginning of the year to $0.35 at the end of the year. Inflation during the year is 5.2% in the U.S. and 3.5% in Germany. What is the real devaluation (-) or real revaluation (+) of the Deutsche mark during the year? a . 9.10% b . 11.02% c . - 7.30% d . - 2.60%

Suppose it is January 1, 1994, and the Deutsche mark revalues from $0.31 at the beginning of the year to $0.35 at the end of the year. Inflation during the year is 5.2% in the U.S. and 3.5% in Germany. What is the real devaluation (-) or real revaluation (+) of the Deutsche mark during the year? a . 9.10% b . 11.02% c . - 7.30% d . - 2.60%

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter8: Relationships Among Inflation, Interest Rates, And Exchange Rates

Section: Chapter Questions

Problem 4ST

See similar textbooks

Similar questions

In the beginning of January of 1994, what was the repo rate in the United States? 3.25 3.00 2.80 3.00 Was this rate higher or lower compared to previous years? lower higher O unchanged How is the repo rate determined? The repo rate is determined by an act of Congress. The U.S. Treasury sets the repo rate. MooBook Pro
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?
Today, the US dollar is trading at ₵4.60, compared to ₵4.20 a year ago. What is the percentage appreciation/depreciation of the dollar relative to the cedi? What is the percentage appreciation/depreciation of the cedi relative to the dollar? Please comment on your results.
When the Swiss franc appreciates. Over the past five years the Swiss franc (CHF) appreciated from CHF 1 = US$0.8215 to peak at CHF 1 = US$1.0697.a. Calculate the percentage appreciation of the Swiss franc at its peak (use a U.S. dollar perspective).b. What is the percentage depreciation suffered by the U.S. dollar over the same period? Is it simply minus (−) the rate of appreciation of the Swiss franc?
Suppose the spot and three-month forward rates for the yen are ¥79.70 and ¥79.04, respectively. b. What would you estimate is the difference between the annual inflation rates of the United States and Japan
Assume that a bank has assets located in Germany worth €150 million earning an average of 8 percent. It also holds €100 in liabilities and pays an average of 6 percent per year. The current spot rate is €1.50 for $1. If the exchange rate at the end of the year is €2.00 for $1, ( LG 19-1) a. What happened to the dollar? Did it appreciate or depreciate against the euro (€)? b. What is the effect of the exchange rate change on the net interest margin (interest received minus interest paid) in dollars from its foreign assets and liabilities? c. What is the effect of the exchange rate change on the value of the assets and liabilities in dollars?
The statement “the yen rose today against the dollar from 121 to 117” will only make sense if The U.S. gains when Japan loses. These numbers measure yen per dollar, not dollars per yen. These numbers are indexes, defined relative to a base of 100. These numbers refer to time of day that the change took place. The yen is a reserve currency.
Assume that a bank has assets located in Germany worth €390 million earning an average of 6 percent. It also holds €190 in liabilities and pays an average of 4 percent per year. The current spot rate is €1.50 for $1. If the exchange rate at the end of the year is €2.00 for $1: a. What happened to the dollar? Did it appreciate or depreciate against the euro (€)?b. What is the effect of the exchange rate change on the net interest margin (interest received minus interest paid) in dollars from its foreign assets and liabilities?c. What is the effect of the exchange rate change on the value of the assets and liabilities in dollars?
In December 1994 the government of Mexico officially changed the value of the Mexican peso from 3.2 pesos per dollar to 5.5 pesos per dollar. Required : What was the percentage change in its value? Was this a depreciation, devaluation, appreciation, or revaluation? Explain. Calculate the Percentage Change in Value Values of Peso - Initial exchange rate (peso/$) 3.20 New exchange rate (peso/$) 5.50
24) In 1999, the euro was trading at $0.84 per euro. If the euro is now trading at $0.99 per euro, what is the percentage change in the euro’s value?
1.Suppose the value of the Polish zloty moves from Z 1100 = $1 at the start of the year to Z 1750 at the end of the year. At the same time, the Polish price level changes from an index of 100 on January 1 to 128 on December 31. U.S. inflation during the year was 4.2%. If the one-year interest rate on the zloty is 46%, what was the real dollar cost of borrowing the zloty during the year? a . 27.81% b . 17.53% c . -8.76% d . -11.93%
a) The 90-day interest rates (annualized) in the U.S. and Japan are, respectively, 10% and 7%, while the direct spot quote for the yen in New York is $.004300. At what 90-day forward rate would interest rate parity hold? b) If the U.S. inflation rate is expected to be 5 percent over the next year, while the German inflation rate is expected to be 3 percent. The current spot rate of the euro is $1.03. Using purchasing power parity, what is the expected spot rate at the end of one year? steps in excel please