Ch02 - Multinational Financial Management Alan Shapiro 9th Edition J.Wiley Sons Power Points by Joseph F Greco Ph.D California State University

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Multinational Financial Management Alan Shapiro 9 th Edition Power Points by Joseph F. Greco, Ph.D. California State University, Fullerton
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CHAPTER 2 The Determination of Exchange Rates
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Equilibrium Exchange Rates I. SETTING THE EQUILIBRIUM A. The exchange rate is the price of one unit of foreign currency expressed as a certain price in local currency. For example, $.99/€ means the euro in the U.S. is worth $.99. 3
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Equilibrium Exchange Rates B. How Do Americans Purchase German Goods? 1. Foreign Currency Demand: -derived from the demand for foreign country’s goods, services, and financial assets. e.g. Americans demand German goods such as Mercedes autos 4
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The Demand for € in the U.S . Qty $1.10/ $/€ D At higher exchange rates, Americans demand less euros and vice versa. $1.20/ € $1.00/ € 5
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Equilibrium Exchange Rates 2. Foreign Currency Supply: - derived from the foreign country’s demand for local goods. - Foreign buyers must convert their
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This note was uploaded on 01/24/2011 for the course FINS 5516 taught by Professor A during the Three '10 term at University of New South Wales.

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Ch02 - Multinational Financial Management Alan Shapiro 9th Edition J.Wiley Sons Power Points by Joseph F Greco Ph.D California State University

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