International Financial Management
International Financial Management
14th Edition
ISBN: 9780357130698
Author: Madura
Publisher: Cengage
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Suppose that one year ago the spot rate for the British pound was $1.68 per pound, while the spot rate for the peso was $1.05 per peso. The cross rate of the British pound one year ago was £1 =     pesos.   Suppose that now the spot rate for the British pound is $2.00 per pound, while the spot rate for the peso was $1 per peso. Now, the cross rate of the British pound is £1 =     pesos. This represents a      percent change in the cross rate of the British pound.
Experts please reject this question - I'm testing a flow. 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.
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.
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  • Suppose we have the following Treasury bill returns and inflation rates over an eight year period:   Year Treasury Bills Inflation 1 10.45%         12.55%         2 11.36            16.00            3 9.06            10.29            4 8.34            7.97            5 8.88            10.29            6 11.23            12.77            7 14.11            16.98            8 15.97            16.90                a. Calculate the average return for Treasury bills and the average annual inflation rate for this period. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)         Treasury bills  %     Inflation  %       b. Calculate the standard deviation of Treasury bill returns and inflation over this period. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)         Treasury bills  %     Inflation  %…
    Mexican interest rates are normally substantially higher than U.S. interest rates. What does this imply about the forward rate as a forecast of the future spot rate? Does the forward rate reflect a forecast of appreciation or depreciation of the Mexican peso? Explain how the degree of the expected change implied by the forward rate forecast is tied to the interest rate differential. Do you think that today’s forward rate or today’s spot rate of the peso provides a better forecast of the future spot rate of the peso?
    1. Which of the following regarding inflation is true? (a) If CPI changes from 100 to 105 in a year and then changes from 105 to 100 in the following year, then the initial rate of price increase is greater than the following rate of price decrease. (b) If CPI doubles in one year and then remains at that high level for five years, it means that the country suffers high inflation for five years. (c) If CPI is cut by half in one year, it means that the deflation rate of that year is 0.5%. ( d) Increasing CPI means that money is getting more and more valuable. (e) None of the above.
  • Consider the following table for an eight-year period:  Year T-bill return Inflation 1 7.47 % 8.53 % 2 8.94   12.16   3 6.05   6.76   4 5.97   5.04   5 5.63   6.52   6 8.54   8.84   7 10.74   13.11   8 13.00   12.34       Calculate the average return for Treasury bills and the average annual inflation rate (consumer price index) for this period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)      Average return for Treasury bills  % Average annual inflation rate  %   Calculate the standard deviation of Treasury bill returns and inflation over this time period. (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)      Standard deviation of Treasury bills  % Standard deviation of inflation  %    Calculate the real return for each year. (A negative answer should be indicated by a minus sign. Leave no cells…
    1, Consider the following table for an eight-year period: Year T-bill return Inflation 1 7.47% 8.53% 2 8.94 12.16 3 6.05 6.76 4 5.97 5.04 5 5.63 6.52 6 8.54 8.84 7 10.74 13.11 8 13.00 12.34  a, Calculate the average return for Treasury bills and the average annual inflation rate (consumer price index) for this period. b, Calculate the standard deviation of Treasury bill returns and inflation over this time period.  c, Calculate the real return for each year. d, What is the average real return for Treasury bills?
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