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Exchange Rate Problems

# Exchange Rate Problems - = \$2/£ and the spot rate in t=1...

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Exchange Rate Problems Name:__________________________ Print your name in the space provided . Do the work in the space provided and staple the pages together before you submit them. These may only be submitted at class when due . You may not e-mail them in and late submissions are not accepted. 1) Given the 2 quoted spot rates \$2/£, and \$0.60/Rp (rupee) find the cross rate Rp/£. ANS:________________ 2) Given the current spot rate of \$0.50/Dm (German mark) and tha 90 day forward rate of \$0.55/Dm. Find the forward discount / premium. ANS:________________ 3) Given the spot rate in t=0 of e

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Unformatted text preview: = \$2/£ and the spot rate in t=1 of e 1 = \$2.10/£. What is the % appreciation/depreciation of the \$? ANS:_________________ NAME___________________________ 4) Given the SR = \$2/£ , and FR 90 =\$1.99/£ and r US = 5% and r UK = 8%, a) Calculate r * (the home country currency rate of return). b) Would you see inward or outward interest arbitrage? 5) Given: r US = 7% and r FR = 12% and the spot rate e = \$0.50/FF (French Franc), find the 1 year forward rate f 1 . 6) Given e = \$2/£, and i US = 4%, and i UK = 1%, where i is the respective rates of inflation. Find e 1 ....
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Exchange Rate Problems - = \$2/£ and the spot rate in t=1...

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