1.Suppose the exchange rate is $1.2655/.From the perspective of a U.S.currency trader, is this a direct exchange rate or an indirect exchange rate?

2.Suppose the exchange rate at the start of the year was $1.6105/.Since the start of the year the pound has appreciated 5%.What is today's exchange rate?(Keeping the USD as the terms currency and the GBP as the base currency)

3.Suppose the exchange rate at the start of the year was $1.6105/.Since the start of the year the dollar has depreciated 3%.What is today's exchange rate?(Keeping the USD as the terms currency and the GBP as the base currency)

4.If the U.S. dollar depreciates relative to the MXN (Mexican peso), the dollar cost to a U.S. firm that buys products produced in Mexico and pays in MXN will ______________.(Answer either rise or fall)

5.Circle the correct quote to use.You are converting dollars into euros.

$1.4653/bid

$1.4677/ask

6.If Sarahdoesa currency exchange andshetellsyou that she converted at$.1022/MXN ask, what currency did Sarah sell and what currency did Sarahbuy?

Sarahsold the ________

Sarahbought the _________

7.Suppose you bought a stock for $50a while ago and now, it is worth $57.When you bought thestock, the CPI index was at 226, and now it is at 234.

What is the nominal return?

What is the inflation rate?

What is the real rate of return?

8.You invest in foreign stocks(Japanese Yen denominated stocks).General Electric is an international bond issuer(Japanese Yen denominated bonds).Generally speaking, ifthe Japanese Yenappreciates over time this will be __________ for youand ____________ for General Electric.

A.Good; Good

B.Good; Bad

C.Bad; Bad

D.Bad; Good

9.Convert $586 into euros at an exchange rate of $1.2145/.How many Euros will you have?

10.Using the quotes in question 5 of this homework, convert1,000,000 into U.S. dollars.How many dollars will you have?

11.If you and Dancompete in a triathlon and you beat Danin the running portion by 3 hours,you beat Danin thebiking portion by 4minutes, and in the swimming portion Dan hasto be saved by a rescue boat, in what portion of the triathlon does Danhave a relative comparative advantage?Explain