PP 4 CH 7 - 8
1. (CFA Problem) Explain the following three concepts of purchasing power parity (PPP):
a. The law of one price is an economic concept which posits that "a good must sell for the same price
in all locations". This law is derived from the ass
Money and politics have always had a strong connection with as early as the very first
elections in the United States. In the late 1700s, to be able to vote, you had to be a white male,
own land, and be over the age of 21, meaning that you had to
INTERNATIONAL FINANCE EXAM TWO
1. What kind of arbitrage will tie up your funds for a significant period of time?
a. Covered interest arbitrage
2. If one country has a higher interest rate, under interest rate parity, their forward rate should
FIN 376 3:30-5 MW
Homework 2, 3, 4, 5
1. No, the world economy grows much faster than the world gold supply. A gold standard
would be unable to support the speed at which the world economy grows.
2. The decrease in the
Topic 1 only
A. Decrease in Yuan foreign exchange rate.
B. Number of Yuan traded on foreign exchange markets falls with the fall in demand.
2. Sell into the market that offers the highest profit return, keeping in mind cur
significa que o valor esperado do estimador igual ao parmetro modelo verdadeiro e eficiente
significa que a varincia do estimador baixo, isto , diferentes amostras dar estimativas
semelhantes. Quando montamos um modelo estatstico a suposio implcita que es
Xn - t -1 n-1 1 + 2 s n < Xn + t -1 n-1 1 + 2 s n = (I. 3.115), onde t-1 de N-1U denota o
quantil u da distribuio padro t com n - 1 graus de liberdade. Por exemplo, se n = 25, = 095, a
mdia da amostra 5 eo desvio padro da amostra 2, ento, uma vez que t -1
pode ser tanto unilateral (<ou>) ou frente e verso (=). 2. Estado da estatstica de teste, X. Muitas
vezes uma variedade de estatsticas de teste est disponvel. As estatsticas de teste paramtricos
mais comuns caem em uma das trs categorias: testes de Wald,
Xi -4 - 2 -6 - 2-1n-4 e a matriz de informao, sendo o valor esperado do negativo desta matriz,
, portanto, I = N-2 0 0 2-1n-4 O inverso da matriz de informao a matriz de covarincia da
probabilidade mxima estima. Esta matriz pode ser usada para fazer infer
2. Reducing Economic Exposure. UVA Co. is a U.S.-based MNC that obtains 40 percent of its foreign
supplies from Thailand. It also borrows Thailands currency (the baht) from Thai banks and converts the
baht to dollars to support U.S. operations. It current
2. Money Market Hedge on Receivables. Assume that Stevens Point Co. has net receivables of 100,000
Singapore dollars in 90 days. The spot rate of the S$ is $.50, and the Singapore interest rate is 2% over 90
days. Suggest how the U.S. firm could implement
Homework 5 International Finance
1. Forward versus Futures Contracts. Compare and contrast forward and futures contracts.
Because currency futures contracts are standardized into small amounts, they can be valuable for the
speculator or small firm (a comm
1. Balance of payment defined as a statistical record of a countrys international transactions, over
a certain period of time presented in the form of double entry book keeping.
2. Why would it be useful to examine a countrys BoP data?
It is useful to exa
Look at the Currency Futures sheet from WSJ on February 5, 2015). Your focus is to look at the
5th column titled Settle: here is an example on euro:
Euro (CME) - 125,000 (per contract), $ per ($).
Practice Problems 3 Options
1. Frank is an option speculator. He anticipates the Danish kroner to appreciate from its current level of
$.19 to $.21. Currently, kroner call options are available with an exercise price of $.18 and a premium
of $.02. Should
FINA 4320 International Finance
Review & Practice Problems for Ch5
Instructor: Dr. Bai
Chapter 5 Currency Derivatives
Concepts and problems
1. Forward contracts (we covered it in PP2 and notes)
2. Futures contract
3. Options (Long a
1. A) Agency problem of Multinational Companies are the disagreement among
top executives on a particular way that the company must operate.
Depending on cultures some may require a small tweak to their product to fit
the consumer needs and wan
HWK CH 8:
8. Comparing Parity Theories. Compare and contrast interest rate parity (discussed in the previous
chapter), purchasing power parity (PPP), and the international Fisher effect (IFE).
Interest rate parity can be evaluated using data at any one po
FINA 4320 International Finance Student Name:
1 Economic exposure refers to:
D) The exposure of a firm's cash flows to exchange rate fluctuations.
2. Transaction exposure reflects:
A) The exposure of a firm's international contractual transactions to exch
1. Exchange Rate Systems Compare and contrast the fixed, freely floating, and managed float exchange
rate systems. What are some advantages and disadvantages of a freely floating exchange rate system
versus a fixed exchange rate system?
Under a fixed exch
1. Percentage Depreciation. Assume the spot rate of the British pound is $1.73. The expected spot
rate one year from now is assumed to be $1.66. What percentage depreciation does this reflect?
($1.66 $1.73)/$1.73 = 4.05%
2. Effects of Real Interest Rates.
4. Exchange rate effects on borrowing Explain how the appreciation of the Japanese yen against the U.S. dollar
would affect the return to a U.S. firm that borrowed Japanese yen and used the proceeds for a U.S. project.
If the Japanese yen appre
2. Locational Arbitrage. Assume the following information:
Bid price of New Zealand dollar
Ask price of New Zealand dollar
Beal Bank Yardley Bank
Given this information, is locational arbitrage possible? If so, explain the steps in
torna-se Xt = + Xt-1 + $ t $ t ~ iid0 2 (I.3.140) Este o modelo aleatrio tempo discreto passeio
com trao e volatilidade. Quando o desvio positivo o processo tem uma tendncia ascendente
e quando negativo, no h uma tendncia descendente ao longo do tempo. Se
of spheres be placed on top of the first, or A-layer. These spheres will naturally sit on the interstices of
the A-layer, that is, on the sites labeled B or C in Fig. 3.24b. But the B and C-sites cannot both be filled in
the second layer of a close-packed
the e3, or z-axis; Ox and Oy are defined in a similar way. There are 2 voids of each type in the cell. Hence
there is an Ox, Oy and Oz void associated with each atom in the BCC structure. The geometry of a
tetrahedral void in the BCC structure is shown in
componentes normais de cada distribuio. Podemos escrever as suas funes de densidade
marginais como hx = 1x 11 2 11 + 1 - 1x 12 2 12 Gy = 2y 21 2 21 + 1 - 2y 22 2 22, onde a
funo de densidade normal. Quando a correlao usado como a dependncia mtrica sua
que altamente dependente da amostra. O estimador de mxima probabilidade de o valor que
maximiza a funo de verossimilhana. Por exemplo, quando existe um nico parmetro da
funo de probabilidade descreve uma curva L, tal como a mostrada na Figura I.3.26. E a
Fig. 4.9: Figure (b) is obtained from (a) by a simple shear of the top over the bottom. Figure (c) shows
how the same shear can be caused by an edge dislocation. 4.3.2 An edge dislocation in a simple cubic
crystal The procedure that was used to create the
testar a igualdade das mdias e varincias para decidir se duas populaes so idnticas. No
entanto, distribuies normais so raros na anlise emprica. A seguir, descrevemos os testes
bsicos de Kolmogorov-Smirnoff para a igualdade de distribuies, e uma de suas
the electrons were placed in the states of lowest possible energy. We shall discuss this point further
when we consider the electrical properties of conductors.) In the band model there are two situations
that lead to metallic conduction. They are illustr