54 eurocurrency markets are subject to more stringent

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54) Eurocurrency markets are subject to more stringent reserve requirements than those imposed on U.S. bank s by the Federal Reserve.
55) For at least two years from early 2006 to early 2008, the euro maintained a strong and steady rise in value a gainst the U.S. dollar (USD). Which of the following were NOT a contributing factor in the assent of the euro and t he decline in the dollar?
B) a general weakening of the dollar after the attacks of September 11, 2001 C) large U.S. balance of payment surpluses D) All of the above were contributing factors. 56) In London an investor can buy a U.S. dollar for £0.5356. In New York the £/$ exchange rate is the same as fou nd in London. Given this information, what is the $/£ exchange rate in New York?
57) What was the annualized forward premium on the pound if the spot rate on January 20, 2005 was £0.5156$ and the 180 day forward rate was £0.5000/$?
9 | P a g e M i d T e r m E x a m - I n t e r n a t i o n a l F i n a n c e
Essay Questions 1) The mobility of international capital flows is causing emerging market nations to choose between a free- floating currency exchange regime and a currency board (or taken to the limit, dollarization). Describe how e ach of the regimes would work and identify at least two likely economic results for each regime.
2) On January 4, 1999 the member nations of the EMU introduced a new unified currency, the euro, to replace the individual national currencies of many member nations. Identify and explain several of the arguments ma de both for and against the euro. Do you think the euro has proven to be a "good" idea? Why/Why not?
10 | P a g e M i d T e r m E x a m - I n t e r n a t i o n a l F i n a n c e

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