{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

eiteman_178963_im02

# eiteman_178963_im02 - Problem 2.1 Frankfurt and New York...

This preview shows pages 1–5. Sign up to view the full content.

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

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
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)
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)

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
Problem 2.4 Gold Standard What was the exchange rate between the FF and US\$?
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 10

eiteman_178963_im02 - Problem 2.1 Frankfurt and New York...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online