Chapter 4, Problem 1BIC

Match each term in Column A with its related definition in Column B. Column A 1. ____________ Spot rate 2. ____________ Currency appreciation 3. ____________ Translation risk 4. ____________ Transaction risk 5. ____________ Exchange rate Column B a. The rate at which one currency can be traded for another currency. b. The possibility that future cash transactions will be affected by changing exchange rates. c. A month ago, 1 U.S. was worth 8.5 Mexican pesos. Today, 1 is worth 9.0 Mexican pesos. The U.S. dollar has undergone what? d. The degree to which a firms financial statements are exposed to exchange rate fluctuation. e. The exchange rate of one currency for another for immediate delivery (today).

Some of the websites show graphs indicating how one currency has done relative to another currency. a. Over the past year, how has the pound performed against the dollar? Does the dollar buy more or less pounds today than it did 1 year ago? b. Over the past year, how has the dollar performed against the yen? Does the dollar buy more or less yen today than it did 1 year ago?

If the Canadian dollar appreciate by 5% relative to the British pound, what will be the percentage British pound depreciate?

Which option shows the presentation currency and denomination of the financial statements? a. USD in Millions b. USD in Whole Dollars c. USD in Thousands

The Simpson Corporation is calculating their adjusted balance sheet into U.S. Dollars. The exchange rate at the beginning of the year was $1 Euro = $1 U.S. dollar. The current exchange rate is .80 Euros to $1.00. Net Income for the year was zero. How much is the accounting gain/loss due to the exchange rate change? Beginning Balance Sheet: Assets = 3,000 EurosEquity = 1,500 EurosLiabilities = 1,500 Euros $125, gain $375, loss $375, gain $500, loss $500, gain

Suppose the exchange rate between U.S. dollars and British Pounds is $1.00 = 1.70 Pounds and the exchange rate between the U.S. dollar and the Euro is $1.00 = 1.24 Euros.  What is the direct quote cross rate of one Pound to the euro? (How many Euros will one Pound purchase?) Instruction: Type your answer in euros, and round to two decimal places.

If British pounds sell for $1.43 (U.S.) per pound, what should dollars sell for in pounds per dollar? Round your answer to four decimal places. _____  pound per dollar

Given the following exchange rates, calculate the percentage change in the USD value relative to the Chinese yuan (CNY) in 2020. January 1, 2020: 7.05 CNY/USD December 31, 2020: 0.1608 USD/CNY   Pick the closest answer from the choices below.   A. USD depreciated 11.8% relative to Chinese yuan in 2020.   B. USD appreciated 13.4% relative to Chinese yuan in 2020.   C. USD depreciated 13.4% relative to Chinese yuan in 2020.   D. USD appreciated 11.8% relative to Chinese yuan in 2020.

By definition, currency appreciation occurs when: a. the value of all currencies falls relative to gold. b. the value of all currencies rises relative to gold. c. the value of one currency rises relative to another currency. d. the value of one currency falls relative to another currency.