A recent survey of us foreign exchange traders

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International Financial Management
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Chapter 8 / Exercise 32
International Financial Management
Madura
Expert Verified
64. A recent survey of U.S. foreign exchange traders measured traders perceptions about how fast news events that cause movements in exchange rates actually change the exchange rate. The survey respondents claim that the bulk of the adjustment to economic announcements regarding unemployment, trade deficits, inflation, GDP, and the Federal funds rate takes place within A. ten secondsB.one minute.C. five minutesD. one hourThe answer is "one minute" but note that one-third of the respondents claim that full price adjustment takes place in less than ten seconds. You might consider partial credit for response a)
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International Financial Management
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Chapter 8 / Exercise 32
International Financial Management
Madura
Expert Verified
Chapter 05 The Market for Foreign Exchange65. The forward price
66. Relative to the spot price the forward price will be
67. For a U.S. trader working in American quotes, if the forward price is higher than the spot price
68. The forward market A. Involves contracting today for the future purchase of sale of foreign exchange at the spot rate that will prevail at the maturity of the contract.B.Involves contracting today for the future purchase of sale of foreign exchange at a price agreed upon today.C. Involves contracting today for the right but not obligation to the future purchase of sale of foreign exchange at a price agreed upon today.D. None of the above
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Chapter 05 The Market for Foreign Exchange69. The $/CD spot bid-ask rates are $0.7560-$0.7625. The 3-month forward points are 12-16. Determine the $/CD 3-month forward bid-ask rates.
70.(p. 127)Restate the following one-, three-, and six-month outright forward American term bid-ask quotes in forward points: A.B. C. D. None of the aboveSince the currency is trading at a forward premium add 0.0015 to 0.8500 to get to 0.8512 in the case of the six month bid price. It's backwards if the currency trades at a discount.5-28
Chapter 05 The Market for Foreign Exchange

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