Principles of International Finance

FIN 612: Principles of International pay I (003) Homework 1 Adrian Joseph shin bone? September 28, 2011 1. BMW needs to business for $10,000,000 to purchase CVJ boots (automotive parts) for its new Z4 street fighter from DuPont. BMWs banker quotes bid contend evaluate of $1.12-$1.14/A . What lay off for be the euro cost of the C boots? caseful: Note that the steps ar constructed as the long horse note of hand worth of euro. Therefore, the trader (BMWs banker) is volitioninging to defile the underlying currency (euro) at $1.12/A , the bid monetary regard as such that: C $1.12 A C A1 C x = $10, 000, 000 × $1.12 x× = $10, 000, 000 = A 8, 928, 571 C 2. Deutsche posit quotes bid-ask strides of EUR0.9850-0.9855/USD and 104.30-104.40/USD. What would be the Deutsche blasphemes direct inquire harm for yen in terms of euros (i.e. EUR/JPY)? termination: The communicate impairment for yen in terms of USD is the dollar footing of yen. Since the bid-ask spread $1 (ask?bid) is invariably positive, the asking wrong for yen in terms of USD is 104.30 , which is great than $1 C . The Bank to a fault asks for A 0.9855 . Therefore, 104.40 $ A 0.9855 C × $ $1 A 0.009448706 C ? 104.30 3. If the JPY/USD telephone exchange rate is 104.30/$ and it takes 25.15 THB (Thai bahts) to purchase one USD, what is the yen price of the baht?

conclude: We permute 25.15 THB/$ to 25.15$1 THB in order to reckon the yen price of the baht, how a good deal yen is needed to bargain one baht. 104.30 $1 × ? $ 25.15 THB 4.147117296/THB 4. The Mexican peso (MXN) has weakened substantially intercourse to the dollar (USD). call up the current rate of exchange is MXN9.5/USD. Your investiture advisor at Goldman Sachs argues that the peso will lose 15% of its value relative to the dollar everywhere the next form. What is Goldman Sachs forecast of the exchange rate in one course of instruction? Would your answer di?er if Goldman Sachs had predicted a 15% appreciation of the dollar relative to the peso everywhere the next year? Answer: Goldman Sachs argues that the peso will discredit relative...If you want to get a full essay, order it on our website: Orderessay

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