sample_quiz_3[1]

# sample_quiz_3[1] - Version Fin 536 Sample Quiz 3...

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Version Fin 536 Sample Quiz 3 Name____________Section_4pm/7pm Note: You must review all potential topics for the quiz. This sample quiz does not cover all testable topics. 1. Fill out the answers. a. (PPP forecast)Assume that the inflations rates in Japan and in the U.S. are forecasted to be 1% and 3% respectively, if the current spot rate is ¥90/\$, then the forecast of the exchange rate is ¥______________\$ in a year. b. (Forward forecast) Sometimes, we can simply use the forward price as our forecast of future foreign exchange rate. Suppose that the current spot rate is \$1.5/€. The interest rate is 1% in the U.S. and 2.5% in Europe. Then your forecast of spot rate in one year is _______________ using the forward rate as the forecast. c. (Pass-through) The price of a European car is €10000. The current exchange rate is S(\$/€)=1.40. The price of the car in the U.S. is then \$______________. If the U.S. dollar depreciates by 10% against the Euro, the price of the car in the U.S. is then \$______________with 100% pass-

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## This note was uploaded on 09/06/2011 for the course FIN 536 taught by Professor Staff during the Spring '11 term at S.F. State.

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sample_quiz_3[1] - Version Fin 536 Sample Quiz 3...

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