EBK CORPORATE FINANCE
11th Edition
ISBN: 8220102798878
Author: Ross
Publisher: YUZU
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Question
Chapter 31, Problem 2QP
a.
Summary Introduction
To identify: The currency that should be chosen $100 or £100.
Exchange rate:
Exchange rate is the rate of conversion of value of one currency into another. It is the price of value of one currency into another.
b.
Summary Introduction
To identify: The currency that should be choose 100 Swiss francs (SF) or £100.
c.
Summary Introduction
To calculate: The cross-rate for Swiss francs in terms of British pounds and for British pounds in terms of Swiss francs
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TIPS FOR READING AN EXCHANGE RATE CHART: Read down the chart. For example, in column 1 it says the US Dollar is equal to each of the currencies below it. Therefore $1 = .76 £ or $1 = .89 €.
Exchange Rate Table for Month 1
US Dollar
$1 =
British Pound
1 £ =
Chinese Yuan
1 Y =
Japanese Yen
1 ¥ =
Euro
1€
US Dollar
---
1.32
.16
.0088
1.13
British Pound
.76
---
.12
.0067
.85
Chinese Yuan
6.37
8.46
---
.056
7.21
Japanese Yen
113.04
149.55
17.75
---
127.55
Euro
.89
1.17
.14
.0078
---
Exchange Rate Table for Month 2
US Dollar
$1 =
British Pound
1 £ =
Chinese Yuan
1 Y =
Japanese Yen
1 ¥ =
Euro
1€
US Dollar
---
1.40
.20
.0080
1.17
British Pound
.70
---
.11
.0065
.89
Chinese Yuan
6.20
8.72
---
.062
7.59
Japanese Yen
116.24
146.89
16.32
---
117.2
Euro
.92
1.11
.15
.0078
---
An American company contracts a…
TIPS FOR READING AN EXCHANGE RATE CHART: Read down the chart. For example, in column 1 it says the US Dollar is equal to each of the currencies below it. Therefore $1 = .76 £ or $1 = .89 €.
Exchange Rate Table for Month 1
US Dollar
$1 =
British Pound
1 £ =
Chinese Yuan
1 Y =
Japanese Yen
1 ¥ =
Euro
1€
US Dollar
---
1.32
.16
.0088
1.13
British Pound
.76
---
.12
.0067
.85
Chinese Yuan
6.37
8.46
---
.056
7.21
Japanese Yen
113.04
149.55
17.75
---
127.55
Euro
.89
1.17
.14
.0078
---
Exchange Rate Table for Month 2
US Dollar
$1 =
British Pound
1 £ =
Chinese Yuan
1 Y =
Japanese Yen
1 ¥ =
Euro
1€
US Dollar
---
1.40
.20
.0080
1.17
British Pound
.70
---
.11
.0065
.89
Chinese Yuan
6.20
8.72
---
.062
7.59
Japanese Yen
116.24
146.89
16.32
---
117.2
Euro
.92
1.11
.15
.0078
---
An American family goes on vacation…
TIPS FOR READING AN EXCHANGE RATE CHART: Read down the chart. For example, in column 1 it says the US Dollar is equal to each of the currencies below it. Therefore $1 = .76 £ or $1 = .89 €.
Exchange Rate Table for Month 1
US Dollar
$1 =
British Pound
1 £ =
Chinese Yuan
1 Y =
Japanese Yen
1 ¥ =
Euro
1€
US Dollar
---
1.32
.16
.0088
1.13
British Pound
.76
---
.12
.0067
.85
Chinese Yuan
6.37
8.46
---
.056
7.21
Japanese Yen
113.04
149.55
17.75
---
127.55
Euro
.89
1.17
.14
.0078
---
Exchange Rate Table for Month 2
US Dollar
$1 =
British Pound
1 £ =
Chinese Yuan
1 Y =
Japanese Yen
1 ¥ =
Euro
1€
US Dollar
---
1.40
.20
.0080
1.17
British Pound
.70
---
.11
.0065
.89
Chinese Yuan
6.20
8.72
---
.062
7.59
Japanese Yen
116.24
146.89
16.32
---
117.2
Euro
.92
1.11
.15
.0078
---
A currency depreciates (or gets…
Chapter 31 Solutions
EBK CORPORATE FINANCE
Ch. 31 - Spot and Forward Rates Suppose the exchange rate...Ch. 31 - Prob. 2CQCh. 31 - Prob. 3CQCh. 31 - Prob. 4CQCh. 31 - International Risks At one point, Duracell...Ch. 31 - Multinational Corporations Given that many...Ch. 31 - Prob. 7CQCh. 31 - Exchange Rate Movements Some countries encourage...Ch. 31 - Prob. 9CQCh. 31 - Exchange Rate Risk If you are an exporter who must...
Ch. 31 - International Capital Budgeting Suppose it is your...Ch. 31 - International Capital Budgeting An investment in a...Ch. 31 - International Borrowing If a U.S. firm raises...Ch. 31 - International Investment If financial markets arc...Ch. 31 - Using Exchange Rates Take a look back at Figure 3...Ch. 31 - Prob. 2QPCh. 31 - Prob. 3QPCh. 31 - Using Spot and Forward Exchange Rates Suppose the...Ch. 31 - Prob. 5QPCh. 31 - Prob. 6QPCh. 31 - Interest Rates and Arbitrage The treasurer of a...Ch. 31 - Inflation and Exchange Rates Suppose the current...Ch. 31 - Exchange Rate Risk Suppose your company imports...Ch. 31 - Prob. 10QPCh. 31 - The International Fisher Effect You observe that...Ch. 31 - Prob. 12QPCh. 31 - Prob. 13QPCh. 31 - Capital Budgeting Lakonishok Equipment has an...Ch. 31 - Capital Budgeting You are evaluating a proposed...Ch. 31 - Prob. 16QPCh. 31 - Prob. 17QPCh. 31 - Using the Exact International Fisher Effect From...Ch. 31 - Prob. 1MCCh. 31 - What will happen to the companys profits if the...Ch. 31 - Ignoring taxes, what are East Coast Yachts...Ch. 31 - How can the company hedge its exchange rate risk?...Ch. 31 - Taking all factors into account, should the...
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- Use the information below to answer the following questions. U.S. $ EQUIVALENT CURRENCY PER U.S. $ Polish Zloty .2977 3.3586 Euro 1.2183 .8208 Mexican Peso .0752 13.2989 Swiss Franc 1.0163 .9840 Chilean Peso .002071 482.80 New Zealand Dollar .8086 1.2367 Singapore Dollar .8010 1.2485 a. If you have $200, how many Polish zloty can you get? (Do not include the Polish zloty sign (Z). Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. How much is one euro worth in U.S. dollars? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) c. If you have 5.90 million euros, how many dollars do you have? (Do not round intermediate calculations and round your answer to…arrow_forwardUse the information below to answer the following questions. U.S. $ EQUIVALENT CURRENCY PER U.S. $ Polish Zloty .2994 3.3406 Euro 1.2456 .8028 Mexican Peso .0752 13.2998 Swiss Franc 1.0352 .9660 Chilean Peso .002071 482.80 New Zealand Dollar .8080 1.2376 Singapore Dollar .8004 1.2494 a. If you have $275, how many Polish zloty can you get? (Do not include the Polish zloty sign (Z). Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. How much is one euro worth in U.S. dollars? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) c. If you have 4.10 million euros, how many dollars do you have? (Do not round intermediate calculations and round your answer to…arrow_forwardIntroduction to Exchange Rates and the Foreign Exchange Market - EOC Refer to the exchange rates given in the table to answer the questions. Please round your answer to the nearest ten thousandths. Country (currency) January 20, 2016 FX per $ January 20, 2015 FX per £ FX per € FX per $ Australia (dollar) 1.459 2.067 1.414 1.223 Canada (dollar) 1.451 2.056 1.398 1.209 Denmark (krone) 6.844 9.694 7.434 6.430 Eurozone (euro) 0.917 1.299 1.000 0.865 Hong Kong (dollar) 7.827 11.086 8.962 7.752 India (rupee) 68.05 96.39 71.60 61.64 Japan (yen) 116.38 164.84 136.97 118.48 Mexico (peso) 18.60 26.346 16.933 14.647 Sweden (krona) 8.583 12.157 9.458 8.181 United Kingdom (pound) 0.706 1.000 0.763 0.600 United States (dollar) 1.000 1.416 1.156 1.000 a. What was the US dollar to Japanese yen exchange rate on January 20, 2016? 116.38 Es Incorrect b. What was the US dollar to Japanese yen exchange rate on January 20, 2015? ES: 118.48 Incorrect c. What was the percentage change in the value of the US…arrow_forward
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