17. Cross Rates:

1. At today's spot exchange rates 1 U.S. dollar can be exchanged for 11 Mexican pesos or for 111.82 Japanese yen. You have pesos that you would like to exchange for yen. What is the cross rate between the yen and the peso; that is, how many yen would you receive for every peso exchanged?

a.___ yen per peso.

Interest Rate Parity:

2.The nominal yield on 6-month T-bills is 8%, while default-free Japanese bonds that mature in 6 months have a nominal rate of 3.5%. In the spot exchange market, 1 yen equals $0.005. If interest rate parity holds, what is the 6-month forward exchange rate?

a. ____Round the answer to five decimal places.

Purchasing Power Parity:

3. A computer costs $420 in the United States. The same model costs 800 euros in France. If purchasing power parity holds,

a.what is the spot exchange rate between the euro and the dollar? Round your answer to two decimal places. $1 = euros

Exchange Rate:

4.If euros sell for $1.35 (U.S.) per euro,

a. what should dollars sell for in euros per dollar? Round your answer to two decimal places. euros per dollar

Currency Appreciation:

5.Suppose that the exchange rate is 0.70 dollars per Swiss franc. If the franc appreciated 11% against the dollar,

a. how many francs would a dollar buy tomorrow? Round your answer to two decimal places. francs

Cross Rates:

6. Suppose the exchange rate between U.S. dollars and the Swiss franc is SFr1.2 = $1, and the exchange rate between the dollar and the British pound is 1 = $1.40.

a. What then is the cross rate between francs and pounds? Round your answer to two decimal places. Swiss francs per pound