Exchange risk questions:

Suppose that the exchange rate for Japanese Yen moves from 110 yen/$ to 112 yen/$. Did the yen strengthen or weaken against the dollar?

a) strengthen

b) weaken

c) stayed the same

d) cannot tell from this information

e) dumb question the Japanese Yen is a reptile that feeds on termites, not a currency

Suppose the spot rate for the British Pound is 1.28 US Dollars (USD) per 1 British Pound (GBP) and the six month forward rate is 1.24 USD per 1 GBP. Which currency is expected to appreciate in value?

a) GBP

b) USD

If your US-based company sells software, priced in Dollars, to a Japanese firm, what type of currency movement between Yen and US Dollars could cause you to lose sales?