CHAPTER 3fin370

CHAPTER 3fin370 - CHAPTER 3 Explain how the appreciation of...

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CHAPTER 3 Explain how the appreciation of the Australian $ against the US $ would affect the return to a US firm that invested in Australian money market securities.
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CHAPTER 3 Explain how the appreciation of the Japanese yen against the US $ would affect the return to a US firm that borrowed yen and used the proceeds for a US project.
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CHAPTER 3 Utah Bank’s bid price for Canadian $’s is $0.7936 and its ask price is $0.81. What is the bid ask percentage spread? Can $ bid price =0.7936 Can $ ask price= 0.81 % spread = (0.81 – 0.7938) /0.81 = 0.02 = 2%
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CHAPTER 3 The Wolfpack Corp. is a US exporter that invoices its exports to the UK in pounds. If it expects that the pound will appreciate against the dollar , should it hedge its exports with a forward contract? Explain. - No change for the buyers. Should not hedge its exports with a forward contract. Level of certainty is minimize, avoid being lock in to a rate, don’t have to pay a fee on foreign contract. So you can pocket the fee you make w/o paying the fee.
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This note was uploaded on 09/01/2008 for the course FIN 370 taught by Professor Storey during the Spring '08 term at CSU Fullerton.

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CHAPTER 3fin370 - CHAPTER 3 Explain how the appreciation of...

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