Finance 40500
Solutions to Group Assignment #6
1) Assume that todays settlement price on a EUR futures contract is $1.3140/EUR.
You have a short position in one contract. Your performance bond account
FIN 40500
Solutions to Group Assignment #5
1) Suppose that the Fed decreases the supply of money by 10%.
a) In the long run, once all prices have had a chance to adjust, the only
impact will be a 10%
Finance 40500
Group Assignment #4
1) Suppose that General Electric is anticipating European sales over the next month
to be E 12,500,000. The current EUR/USD exchange rate is 1.2665, but GE is
anticip
Finance 40500
Group Assignment #3
1) Suppose that the U.S. and Mexico produce and consume three goods - computers,
petroleum, and medical care. Computers and petroleum are traded
internationally, but
Finance 40500
Group Exercise #2
1) Suppose that the US exports wheat and imports Televisions. For simplicity,
assume that both goods are invoiced in Yen and that the US is too small to
influence globa
Finance 40500
Group Exercise #1
1) Suppose that both the US and Europe are following a gold standard. The price of
gold in the US is pegged at $650/oz while the price of gold in Europe is pegged at
E
Finance 475
Solutions to Problem Set #8
1) We have the following equation (Standard Errors in Parentheses)
% Change($/E) = -.05 + 1.5 (Interest Differential) + .65(Growth Difference) + Error
(.006) (.
Finance 475
Solutions to Problem Set #4
Monetary Model (Flexible Prices): In the flexible price framework, all that
matters are money markets and PPP to tie together the two price levels. A 10%
increa
FIN 40500
Solutions to Group Assignment #7
1) We have the following regression equation for the annual % change in the British
Pound ( in dollars per pound) standard errors are in parentheses.
(
)
%e