1. A German sports car is selling for 70,000 euros. What is the dollar price in the...

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1. A German sports car is selling for 70,000 euros. What is the dollar price in the United States for the Germancar if the exchange rate is 0.90 euros per dollar?

2.The current exchange rate between the Japanese yen and the U.S. dollar is 120 yen per dollar. If the dollar is expected to depreciate by 10% relative to the yen, what is the new expected exchange rate?

3. If the price level recently increased by 20% in England while falling by 5% in the United States, how much must the exchange rate change if PPP holds? Assume that the current exchange rate is 0.55 pounds per dollar.

4. Short-term interest rates are 2% in Japan and 4% in the United States. The current exchange rate is 120 yen per dollar. What is the expected forward exchange rate?

5. Short-term interest rates are 2% in Japan and 4% in the United States. The current exchange rate is120 yen per dollar. If you can enter into a forwardexchange rate of 115 yen per dollar, how can youarbitrage the situation?

6. The New Zealand dollar to U.S. dollar exchange rate is 1.36, and the British pound to U.S. dollar exchange rate is 0.62. If you find that the British pound to New Zealand dollar were trading at 0.49, what would you do to earn a riskless profit?

7. In 1999 the euro was trading at $0.90 per euro. If the euro is now trading at $1.16 per euro, what is the percentage change in the euro's value? Is this an appreciation or depreciation?

8. The Brazilian real is trading at 0.375 real per U.S. dollar. What is the U.S. dollar per real exchange rate?

9. The Mexican peso is trading at 10 pesos per dollar. If the expected U.S. inflation rate is 2% while the expected Mexican inflation rate is 23% over the next year, what is the expected exchange rate in one year?

10. An investor in Canada purchased 100 shares of IBM on January 1 at $93.00 per share. IBM paid an annual dividend of $0.72 on December 31. The stock was sold that day as well for $100.25. The exchange rate was $0.68 per Canadian dollar on January 1 and $0.71 per Canadian dollar on December 31. What is the investor's total return in Canadian dollars?