Fin 534 week 12 quiz 10


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Fin 534 week 12 quiz 10

  1. 1. FIN 534 Week 12 Quiz 10 (15 questions with answers) 99,99 % Scored PLEASE DOWNLOAD HEREFinance 534 week 11 quiz 10• Question 1Suppose DeGraw Corporation, a U.S. exporter, sold a solar heating station to aJapanese customer at a price of 143.5 million yen, when the exchange rate was140 yen per dollar. In order to close the sale, DeGraw agreed to make the billpayable in yen, thus agreeing to take some exchange rate risk for the transaction. The terms were net 6 months. If the yen fell against the dollar such that onedollar would buy 154.4 yen when the invoice was paid, what dollar amount wouldDeGraw actually receive after it exchanged yen for U.S. dollars?Question 2Suppose 144 yen could be purchased in the foreign exchange market for oneU.S. dollar today. If the yen depreciates by 8.0% tomorrow, how many yen couldone U.S. dollar buy tomorrow?• Question 3Suppose one British pound can purchase 1.82 U.S. dollars today in the foreignexchange market, and currency forecasters predict that the U.S. dollar willdepreciate by 12.0% against the pound over the next 30 days. How many dollarswill a pound buy in 30 days?• Question 4Suppose 6 months ago a Swiss investor bought a 6-month U.S. Treasury bill at aprice of $9,708.74, with a maturity value of $10,000. The exchange rate at thattime was 1.420 Swiss francs per dollar. Today, at maturity, the exchange rate is1.324 Swiss francs per dollar. What is the annualized rate of return to the Swissinvestor?• Question 5A box of candy costs 28.80 Swiss francs in Switzerland and $20 in the UnitedStates. Assuming that purchasing power parity (PPP) holds, what is the currentexchange rate?
  2. 2. • Question 6Suppose one year ago, Hein Company had inventory in Britain valued at 240,000pounds. The exchange rate for dollars to pounds was 1£ = 2 U.S. dollars. Thisyear the exchange rate is 1£ = 1.82 U.S. dollars. The inventory in Britain is stillvalued at 240,000 pounds. What is the gain or loss in inventory value in U.S.dollars as a result of the change in exchange rates?• Question 7Which of the following is NOT a reason why companies move into internationaloperations?• Question 8If one U.S. dollar buys 1.64 Canadian dollars, how many U.S. dollars can youpurchase for one Canadian dollar?• Question 9If the inflation rate in the United States is greater than the inflation rate in Britain,other things held constant, the British pound will• Question 10In 1985, a given Japanese imported automobile sold for 1,476,000 yen, or$8,200. If the car still sold for the same amount of yen today but the currentexchange rate is 144 yen per dollar, what would the car be selling for today inU.S. dollars?• Question 11Suppose the exchange rate between U.S. dollars and Swiss francs is SF 1.41 =$1.00, and the exchange rate between the U.S. dollar and the euro is $ euros.What is the cross-rate of Swiss francs to euros?• Question 12Suppose hockey skates sell in Canada for 105 Canadian dollars, and 1 Canadiandollar equals 0.71 U.S. dollars. If purchasing power parity (PPP) holds, what isthe price of hockey skates in the United States?• Question 13If one Swiss franc can purchase $0.71 U.S. dollars, how many Swiss francs canone U.S. dollar buy?• Question 14
  3. 3. Suppose 90-day investments in Britain have a 6% annualized return and a 1.5%quarterly (90-day) return. In the U.S., 90-day investments of similar risk have a4% annualized return and a 1% quarterly (90-day) return. In the 90-day forwardmarket, 1 British pound equals $1.65. If interest rate parity holds, what is the spotexchange rate?• Question 15Which of the following statements is NOT CORRECT?