The Malaysian ringgit peg to the U.S. dollar. Malaysia pegs its currency, the Malaysian ringgit (MYR), to

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The Malaysian ringgit peg to the U.S. dollar. Malaysia pegs its currency, the Malaysian ringgit (MYR), to the U.S. dollar. The par value is MYR 4 = US$1.

a. What is the par value priced in US$ terms for MYR 1?

b. Bank Negara decides to widen the tunnel of allowed fluctuations authorized to +/–7.50 percent around its par value. What are the new ceiling and floor exchange rates?

c. Assume that the MYR revalues by 15 percent against the US$. What is the new par value? What are the new ceiling and floor exchange rates?

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International Corporate Finance Value Creation With Currency Derivatives In Global Capital Markets

ISBN: 9781119550464

2nd Edition

Authors: Laurent L. Jacque

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Question Posted: Mar 09, 2024 01:00 AM

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The Malaysian ringgit peg to the U.S. dollar. Malaysia pegs its currency, the Malaysian ringgit (MYR), to

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a To find the par value priced in US terms for MYR 1 we need to invert the original exchange rate Si...View the full answer

International Corporate Finance Value Creation With Currency Derivatives In Global Capital Markets

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