International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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if we to use the monetary approach to exchange rate determination, what would be the predicted effect on the xchange rate of domestic currency if domestic real income increases
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?
Based on the reading and the table above, is the exchange rate of dollars to pounds fixed or flexible? Explain your answer.
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- What other predictor(s) would you use, besides PPP and IRP, to forecast the U.S. exchange rate against the Euro?
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Which of the following best describes the terms 'long forward position' and 'short forward position' in foreign exchange trading?
A short forward position is holding a currency for a short duration, while a long forward position is holding it for a longer period.
A short forward position means you have agreed to sell a currency in the future, while a long forward position means you have agreed to buy it in the future.
A long forward position is when you expect the currency's future spot rate to decrease, and a short forward position is when you expect it to increase.
A long forward position means you have agreed to sell a currency in the future, and a short forward position means you have agreed to buy it in the future.
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What types of risks are interest rate andexchange rate swaps designed to mitigate?Why might one company prefer fixed-rate payments while another company prefers floating-ratepayments, or payments in one currency versusanother?
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If PPP held exactly, then the yen would trade at one yen to the dollar. True or False?
Explain.
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What are two advantages and two disadvantages of a fixed exchange rate?
What are two advantages and two disadvantages of a floating exchange rate?
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explain what economists attribute so much attention to Real Exchange Rates? Provide an answer that reflects the depth of your understanding.
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