1.Assume today's settlement price on a Chicago Mercantile Exchange EUR (euro) futures contract ls $1.553/EUR. You enter into a futures contract to hedge a 250,000 payable expected in 6 months. Your initial margin account balance is $20,000. The next day's settlement price is $1.563/EUR Calculate the change in the margin account (also known as the daily profit/loss) and the new margin balance from the daily marking-to-market adjustment over the next day. The contract sizeis 250,000 euros. Initial margin balance (at today's close of $1.553/EUR): $20.000. ?

2.A large increase in inflation in Mexico along with a small increase in US. Inflation is normally expected to cause (assuming no change in interest rates or other factors) a(n)_______ in Mexican demand for US goods, and the Mexican peso should ______. ?

a)Increase; depreciate

b)decrease; appreciate

c)decrease; depreciate

d)Increase; appreciate

3.suppose a U.S firm outsources production to Mexico in order to take advantage of lower labor costs. However, the labor cost savings will be lower in the future than they are now if the U.S. dollar appreciates relative to the peso over time.?

4.A US frim has a -denominated payable of 100,000 in 6 months. Rather than a forward hedge or an option hedge, the US firm is going to execute a money market hedge. -denominated money market deposit earns a 3% return over 6 months (i.e. 3% is not the yearly rate, it is in the 6-month period rate). -denominated money market borrowing cost 4% over 6 months (i.e. 4% is not the yearly rate it is 6-months period rate). If the current exchange rate is .60/$. What is the guaranteed dollar amount the US firm will have to pay today in order to pay off the? 100,000.?

5.A Japanese firm issues a $-denominated bond and sells the bond in the US. this is a.?