eiteman_178963_im02

eiteman_178963_im02 - Problem 2.1 Frankfurt and New York...

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Problem 2.1 Frankfurt and New York What is the exchange rate between the dollar and the euro? Assumptions Values Buy a US dollar in Frankfurt for (in euros/$) 0.9200 Which is equivalent, the reciprocal, in $/euro $1.0870 Buy a euro in NY for (in $/euros) $1.0870 Which is equivalent, the reciprocal, in euros/$ 0.9200
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Problem 2.2 Peso exchange rate change Peso was "devalued" from 3.2 per dollar to 5.5 per dollar. Any time a government sets, or resets, the value of a currency, it is a managed or fixed exchange rate. A governmental decision to decrease a currency's value when it is a fixed exchange rate is termed a "devaluation." Calculation of Percentage Change in Value Values Initial exchange rate (peso/$) 3.20 Devalued exchange rate (peso/$) 5.50 Percentage change in peso value -41.82% (beginning rate - ending rate) / (ending rate)
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Problem 2.3 Good as Gold What if gold had cost $38.00 per ounce? Gold Standard Assumptions Values What If Price of an ounce of gold in US dollars ($/oz) $20.67 $38.00 Price of an ounce of gold in British pounds (₤/oz) £4.2474 £4.2474 What is the implied US$/₤ exchange rate? $4.8665 $8.9466 (dollar price of an ounce / pound price of an ounce)
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Gold Standard What was the exchange rate between the FF and US$? Assumptions Values Price of an ounce of gold in US dollars ($/oz) $20.67 Price of an ounce of gold in French francs (FF/oz) 310.00 What is the implied French franc/US$ exchange rate? 15.00
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eiteman_178963_im02 - Problem 2.1 Frankfurt and New York...

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