1 Suppose that the Canadian dollar was worth 1.15 euros on January 1. Today, each euro is worth .82 Canadian dollars. Find the percentage appreciation/depreciation of the Canadian dollar from the European point of view. (Round any intermediate steps to four decimal places) -.0604 .057 .0604 -.057 .5 points Question 2 Suppose that the value of the Swiss franc appreciates by 15% from the Canadian point of view. What is the percentage appreciation/depreciation of the Canadian dollar from the Swiss point of view? -17.65% 17.65% -13.04% 15.00% .5 points Question 3 An increase in the value of a domestic country's currency: an increase in government aid to other nations an increase in the balance of trade a rise in the cost of foreign produced goods to domestic citizens a rise in the cost of domestic produced goods to foreign citizens .5 points Question 4 Suppose that a British citizen observes the following quotes between the pound and the peso: 1/1: MP12/BP 5/1: BP.07/MP Find the percentage change in the value of the peso from the British point of view. .1905 -.16 -.1905 .16 .5 points Question 5 A decrease in Canadian inflation relative to Japanese inflation would likely ____ the Canadian demand for yen and ____ the supply of yen for sale. reduce; increase increase; reduce reduce; reduce increase; increase .5 points Question 6 Assume that the real interest rate becomes much higher in the U.K. relative to the U.S. This will place ____ pressure on the value of the British pound. Also, assume that inflation rates in the U.S. begin to rise relative to inflation rates in the U.K. The change in inflation will place ____ pressure on the value of the British pound. upward; downward upward; upward downward; upward downward; downward .5 points Question 7 The real interest rate adjusts the nominal interest rate for exchange rate movements inflation income growth government controls .5 points Question 8 Any event that decreases the Mexican demand for the dollar should result in ____ in the value of the peso with respect to the dollar, all else being equal an increase a decrease no change .5 points Question 9 If someone tells you that the dollar appreciated relative to the pound, it must also be true that the pound depreciated against the dollar True False .5 points Question 10 Governments can affect the value of their nation's currency by purchasing or selling currency in the foreign exchange market. True False .5 points Question 11 Use the following table to answer the next four questions: Currency 5/1 5/2 5/3 5/4 Pounds .8BP/E 1.3E/BP 1.4E/BP .85BP/E Francs 1.1E/SF 1.08E/SF .92SF/E 1.13E/SF Can. Dollars (CD) 1.2CD/E 1.18CD/E .88E/CD .85CD/E Australian Dollars (AD) 1.02E/AD 1.04E/AD .93AD/E 1.1E/AD Find the percentage appreciation/depreciation of the euro from the Swiss point of view from 5/3 to 5/4. (Round any intermediate steps to four decimal places) -.0381 -.0396 .0381 .0396 .5 points Question 12 How many pounds would you receive in exchange for 80,000 Canadian dollars on 5/2? (Round any intermediate steps to four decimal places) 122,718.21 52,151.24 53,333 83,333.33 .5 points Question 13 How many francs would you receive for 75,000 Australian dollars on 5/2? (Round intermediate steps to 4 decimal places) 72,225 77,884.62 66,773.50 84,240 .5 points Question 14 Suppose you convert 400,000 euros to Australian dollars on 5/2. You then convert your Australian dollars into francs on 5/3. Finally, you convert your francs to pounds on 5/4. How many pounds will you end up with? Round intermediate steps to four decimal places. 396,126.74 373,438.55 365,450.79 395,252.67 .5 points Question 15 The forward market deals with the exchange of foreign currency for immediate delivery. True False .5 points Question 16 Suppose a bank customer with 1,000,000 wishes to trade out of euro and into Japanese yen. The dollar-euro exchange rate is quoted as $1.50/ and the yen-dollar exchange rate is quoted at 100/$. How many yen will the customer get? (Round intermediate steps to four decimal places.) 6700 62,500,000 149,253,731.3 160,000,000 .5 points Question 17 Suppose you observe the following exchange rates: $2.00/ .8/$ Find the value of euros in terms of pounds. 1.6/ .625/ 2.5/ .4/ .5 points Question 18 Indirect exchange rate quotations from the Canadian perspective state the value a unit of foreign currency in terms of Canadian dollars. True False .5 points Question 19 You observe the following currency quotes during the course of two days: 2/10: SF1.3/$ 2/11: $.8/SF Find the percentage appreciation/depreciation of the dollar from the Swiss view. Round intermediate steps to four decimal places. .625 .04 -.0385 .0385 .5 points Question 20 In order to calculate a cross exchange rate between two currencies, each currency must have a known relationship between a third currency. True False