A German firm is attempting to determine the europound exchange rate and has

A german firm is attempting to determine the

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175) A German firm is attempting to determine the euro/pound exchange rate and has the followingexchange rate information: USD/pound = $1.5509/£ and the USD/euro rate = $1.2194/€.Therefore, the euro/pound rate must be:A) €1.2719/£. B) €0.7316/£. C) €0.7863/£. £1.2719/€.D) 176) The European and American terms for foreign currency exchange are square roots of one another.177) When the cross rate for currencies ofered by two banks difers from the exchange rate ofered by a third bank, a triangular arbitrage opportunity exists.178) A confusing "quirk" of international exchange rates occurs when calculating the percentage change in spot rates from one period to another. The percent change in the spot rate from one period to another when quoted using foreign currency terms is always greater than the percent changes quoted when using home currency terms.179) The most commonly quoted currency exchange is that between the U.S. dollar and the European euro. For example, a quotation of EUR/USD 1.2174. The euro is the base currency and the dollar the price currency.A) TrueB) False180) Since in the U.S. the home currency is the dollar and the foreign currency is the euro, in New York USD 1.2174 EUR 1.00 would be a direct quote on the euro and an indirect quote on the dollar.=181) If an identical product can be sold in two diferent markets, and no restrictions exist on the sale or transportation of product between markets, the product's price should be the same in both markets. This is known as:
182) The Economist publishes annually the "Big Mac Index" by which they compare the prices ofthe McDonald's Corporation's Big Mac hamburger around the world. The index estimates theexchange rates for currencies based on the assumption that the burgers in question are thesame across the world and therefore, the price should be the same. If a Big Mac costs $2.54 inthe United States and 294 yen in Japan, what is the estimated exchange rate of yen per dollaras hypothesized by the Hamburger index?D) 183) If the current exchange rate is 113 Japanese yen per U.S. dollar, the price of a Big Mac hamburger in the United States is $3.41, and the price of a Big Mac hamburger in Japan is 280 yen, then other things equal, the Big Mac hamburger in Japan is:A) over priced.B) correctly priced. C) under priced.D) There is not enough information to determine if the price is appropriate or not.

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