HW1 - FIN 330 Homework 1: Exchange Rates 1) Suppose prices...

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1 FIN 330 Homework 1: Exchange Rates 1) Suppose prices start rising in the United States relative to prices in Japan. What would we expect to see happen to the dollar:yen exchange rate? Explain. 2) Comment on the following headlines in the Wall Street Journal:- a) “Dollar Surges as Coup in Soviet Union Revives Unit’s Appeal as Safe Haven” (August 20, 1991) b) “Dollar Plummets on Soviet Coup Failure” (August 22, 1991) c) “Dollar Falls Across the Board as Fed Cuts Discount Rate to 6.5% from 7% (September 19, 1990) d) “Inflation, Slow Growth Seen Spurring Latin America to Devaluate Currencies” ( January 22, 1990) e) “Germany Raises Interest Rate, and Value of Dollar Declines” ( NYT October 10, 1997) 3) [MFM, Chapter 2] For each of the following scenarios state whether the value of the dollar will appreciate, depreciate or remain the same relative to the Japanese yen. Explain your answer. Assume that exchange rates are free to vary and that other factors are held constant
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HW1 - FIN 330 Homework 1: Exchange Rates 1) Suppose prices...

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