Question 1

Which of the following is correct? The spot and 30 day forward rates for the euro are $1.4757 and $1.48, respectively. The euro is said to be selling at a forward

Accepted Answer

(1.48 / 1.4757 - 1) × 12 = 3.5%

Question 2

Suppose the British pound is quoted at $1.4419-36, and the Swiss franc is quoted at $0.6250-67. What is the direct quote for the British pound in Zurich?

Accepted Answer

1.4419 / .6267 = 2.3008; 1.4436 / .6250 = 2.3098

Question 3

Suppose the Brazilian Real is quoted at $0.9455-9510, and the Thai baht is quoted at $25.2513-3986. What is the direct quote for the Real in Bangkok?

Accepted Answer

25.1267 / .9510 = 26.5524; 25.3986 / .9455 = 26.8626

Question 4

If the direct price of the U.S. dollar is Malaysian ringgit is MYR 2.5 in Kuala Lumpur and transaction costs were .4% of the amount transacted, then the minimum? maximum direct quotes for the ringgit in New York are:

Accepted Answer

1 / 2.5 × 1.004 = .4016; 1 / 2.5 / 1.004 = .3984

Question 5

The spot and 180 day forward rates for the euro are $1.3310 and $1.3402, respectively. Which of the following is correct? The euro is said to be selling at a forward

Accepted Answer

(1.3402/1.3310 - 1 ) × 2 = 1.4

Question 6

On December 3,2001, spot Japanese yen were sold at $0.008058. Suppose the 180-day forward Japanese yen was selling at a 1.91% annualized premium, what is the 180-day forward rate of the yen?

Accepted Answer

.008058 × (1 + .0191 / 2) = .008135

Question 7

The $/MYR exchange rate is MYR1 = $.35 and the MYR/AED exchange rate is AED1 = MYR.31. What is the AED/$ exchange rate?

Accepted Answer

1 / .35 / .31 = 9.217

Question 8

Suppose the British pound is selling for $1.62 and the buying rate for the Swiss franc is $0.71. Which of the following is correct? Then the £/SFr cross rate is

Accepted Answer

1.62 / .71 = 2.2817

Question 9

Suppose the quote for euro is $.9865-92/€. Which of the following is correct? The percent spread is

Accepted Answer

.9892/.9865 - = 0.27%

Question 10

Complete the sentence correctly. The economic experiences of Mexico, Chile, and Argentina in the recent past show that they all possessed a_________.

Accepted Answer

The economic experiences of Mexico, Chile, and Argentina have shown that strong leadership and decisive action by the head of state have been crucial in navigating economic challenges and implementing reforms.

Quiz 3: Country Risk and Currency Markets