1. Assume that the South African Rand (ZAR) and U.S. Dollar (USD) currently are exchanging at

16.00 ZAR per USD. Also, assume that the Japanese Yen (JPY) and U.S. Dollar are currently trading at 130.00 JPY per USD. Assuming cross-exchange rates hold, what would we expect the exchange rate to be for South African Rand and Japanese Yen?

1. 8.125 JPY per ZAR
2. 8.125 ZAR per JPY

C. 2,080 JPY per ZAR

d. 2,080 ZAR per JPY

22. A British firm projects that it will earn 723,000,000 New Zealand Dollars (NZD) after taxes in New Zealand over the next 2 years from sales, and it wishes to avoid the risk from exchange rate fluctuations. Assume a spot rate of 0.51 British pounds (GBP) per NZD, and a more favorable 2 vear forward rate of 0.52 GBP per NZD. The firm believes that the fees for a large forward contract are reasonable. What should the firm do?

1. Purchase a forward contract to receive 723,000,000 NZD for 375,960,000 GBP in 2 years.
2. Purchase a forward contract to receive 375,960,000 GBP for 723,000,000 NZD in 2 years.
3. Purchase 723,000,000 NZD today for 368,730,000 GBP.
4. Purchase 368,730,000 GBP today for 723,000,000 NZD.