ECON303 - Midterm03 - F10

ECON303 - Midterm03 - F10 - o ECON303 International...

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Unformatted text preview: o ECON303 International Economics Midterm #3 (A) November 22, 2010 ® Name: ~ ~ ID Nu m b '- e r - :- - - - - - _ J ~ ,--p~ e"? ;:~ e ~ J?tt "Rr" '"RI\~~ ) S~ (.:\-~) = ~~cA. You are permitted to only have a writing utensil, a non-programmable calculator, and a straight-edge with you during the exam; Answer all o questions fully. Show your work for credit. Be sure to label all curves and points on graphs. I f you feel a graph is appropriate for a question, include one with your answer, even if not explicitly asked for. Be sure to fully discuss your answers. Good Luck!! o- / .. , / r-. \ . J 1. (20 Points) The one-year interest rate in Singapore is 12 percent. The one-year interest rate in the U.S. is 8 percent. The spot rate of the Singapore dollar (S$) is $.50 and the forward rate of the S$ is $.45. Assume zero transactions costs. (a) (10 Points) Does interest rate parity exist? L-;;_ O.Ot(; L~~O.\~ S~{:0Q_G~*-- ~E:~~~~*y »0 sKl ~t S ,~ c..~ \"\ ))~ \--J\)\ , '-lio.- ' i ) /._-l-:.. t--~ \\ ..----- ~O.~ .:/=- 0 , \ 0.06 .. O.\~ ~ . ~5 "'o,So o.So _ 0 ." ::. k - o. S"o o.S-o O. ,,"0 "" - o,~ :. "r'-- O. ~o- o.?.... -:: ~ -- o....
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ECON303 - Midterm03 - F10 - o ECON303 International...

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