2 Marks 8 Marks 6 Foreign Exchange You live in the USA and just came back from

2 marks 8 marks 6 foreign exchange you live in the

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What does the Canadian company Shopify Inc do? 2 Marks 8 Marks 6. Foreign Exchange. You live in the USA and just came back from Canada, where the Canadian dollar was worth $0.77. You still have C$300 from your trip and could exchange them for dollars at the airport, but the airport foreign exchange desk will only buy them for $0.70 U.S. Next week, you will be going to Mexico and will need pesos. The airport foreign exchange desk will sell you pesos for $0.07 U.S. per peso. You met a tourist at the airport who is from Mexico and is on his way to Canada. He is willing to buy your C$300 for 2,750 pesos. Should you accept the offer or cash the Canadian dollars in at the airport? Yes, or No? Explain. 4 Marks 7. What determines Exchange Rates? a) What are the basic laws, factors that determine the value of a currency? Explain. 2 Marks b) In equilibrium, what is the relationship between these two factors? 2 Marks 8. Inflation Effects on Exchange Rates. Assume that the U.S. inflation rate becomes high relative to Canadian inflation. Other things being equal, explain how should this affect the: (a) U.S. demand for Canadian dollars, (b) supply of Canadian dollars for sale, and (c) equilibrium value of the Canadian dollar? 6 Marks 9. Interest Rate Effects on Exchange Rates. Assume U.S. interest rates fall relative to British interest rates. Other things being equal, explain how should this affect the: (a) U.S. demand for British pounds, (b) supply of pounds for sale, and (c) equilibrium value of the pound? Page 3 of 4
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International Finance: SIB675NWW Assignment No. 1 - Due – Tuesday, June 30, 2020 – 90 Marks 6 Marks 1) Cover page with your name and 2) My name ‘Michael Lindsay” 3) Assignment No. 1 4) Subject Name and Number: “SIB675NWW”, and 5) The Due Date: June 30 NOTE: If your work indicates you copied from another student you will get a grade of ZERO! Page 4 of 4
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  • Summer '19
  • United States dollar

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