my country is Singapore 1995-2000
Bb Microsoft Word - question x M Inbox (1,911) - csingh15@ x M ShowTix4U - Ticket Inform x Order 1807212 - EssayPro x Home X com/blackboard.learn.xythos.prod/57c93be5643d6/12578287?X-Blackboard-Expiration=1620259200000&X-Blackboard-Signature=2AbVBZOwDkl7WIN6Pugc 1 /7 - 100% + Instructions for the project: FIN 4375 The following pages contain annual data on interest rates, inflation rates, and percentage change in exchange rates (based on indirect quotes) for foreign countries, including the US, for the period 1995 - 2007. Each one of you is assigned to a foreign country and a six-year time period (1995-2000 or 2001-2006). Please consult the attached list to determine your assigned country and time period. Please use the attached sheets to answer the questions listed based on calculations using the data for the assigned country and the US during the assigned time period. Use geometric instead of arithmetic averages. Use exact instead of the approximate method. There is only one correct answer to these questions. You will be graded on whether or not your answers are correct. The necessary information and concepts are all from Chapter 4. I will discuss the solution techniques to these problems only during class. I will not discuss them with anyone on an individual basis outside the class. MAY 5 stv A W 000 F4 F5 F6 F7 DII F8 F9 F10 F11 F122/7 100% + Please answer the following five questions: Q1. During the assigned time period: US dollar appreciated / depreciated (choose one) in real terms against the currency of foreign country. Q2. During the assigned period, what was the average uncovered rate of return from the US viewpoint for the foreign country? Q3. During the assigned period, what was the average uncovered rate of return from the foreign country's viewpoint? Q4. Based on your answers to questions 2 and 3, given perfect hindsight about interest rates and exchange rate changes during the assigned time period you should have: Invested/ borrowed (choose one) in the US and invested / borrowed (choose one) in foreign country. Q5. Assume that you could both borrow and invest at the average interest rates prevailing in foreign country and in the US during the assigned time period. Also assume that you have a line of credit for one million dollars in the US or an equivalent amount in foreign country. Given perfect hindsight about interest rates and exchange rate changes, please calculate your total profit in dollars using uncovered interest arbitrage during the assigned time period if you followed the strategy chosen in Q4. MAY 15 .... tv 4 W 000 F4 F5 F6 F7 DII F8 DD F9 F10 F11B ? ) 72% [43 Wed May Bb Microsoft Word - question X M Inbox (1,911) - csingh15@ x M ShowTix4U - Ticket Inform x Order 1807212 - EssayPro. x Homewo X board.learn.xythos.prod/57c93be5643d6/12578287?X-Blackboard-Expiration=1620259200000&X-Blackboard-Signature=2AbVBZOwDk17WIN6PuqCsy 3 /7 - 100% + Work Sheet: Statistical Report Country CANADA Four-year time period 1998 1999 2000 2001 Geom Avg Inflation Rate: US 1.5 2.2 3.4 2.8 Inflation Rate: Foreign Country 1.0 1.7 2.7 2.5 Interest Rate: US 5.5 5.3 5.5 3.7 Interest Rate: Foreign Country 5.1 5.2 5.8 2.1 % Change in CD SR (Indirect quote) 7.10 .10 0.00 4.3 % Change in CD SR (Direct quote) = [1/(1 + % change in IQ)] - 1 PPP Implications: Annual Uncovered Rate (for US) Annual Uncovered Rate (for Canada) Suggest investment strategy based on IFE: MAY 5 .... itv A W$ 7 ) 72%% 43 Wed Ma Bb Microsoft Word - question x M Inbox (1,911) - csingh15@1 x M ShowTix4U - Ticket Inform x Order 1807212 - EssayPro. x Home x m/blackboard.learn.xythos.prod/57c93be5643d6/12578287?X-Blackboard-Expiration=1620259200000&X-Blackboard-Signature=2AbVBZOwDkl7WIN6PugC 417 - 100% +| Geometric and Arithmetic Means of Rates and Percentages If the rates for years 1, 2, 3, ... N are R1, R2, R3, .... RN , then you can calculate the arithmetic and geometric mean or averages of these rates over the N years, as follows: Arithmetic Mean (R, + R2 + R3 + .. + RN) /N Geometric Mean [(1+R, )* (1+ R2)* (1+ R3 ) * **(1+ RN ) ]VN- 1 Note, that in the geometric mean formula, the percentages are written in decimals. For example, we use 0.10 instead of 10% and -0.02 instead of -2%. Also in the end we take the Nth root of the product, where N is the number of years in the averaging period. It is important to know that the geometric mean is a more accurate measure than the arithmetic mean. Always try to use the geometric mean method when calculating averages of rate of returns or percentages. Let us assume the following rates of return for the five year period (2000-2004) : 2000 2001 2002 2003 2005 Rates of return 4.75% -8% 0.5% 23% 7% Our estimate of the average rate of return over the 2000-04 period based on: Arithmetic Mean = (0.0475 - 0.08 + 0.005 + 0.23 + 0.07) / 5 = 0.0545 =5.45% Geometric Mean = [(1+ 0.0475)*(1 - 0.08)*(1 + 0.005)*(1 + 0.23)*(1 + 0.07) ]'s - 1 = (1.02746672)1/3 - 1 = 0.04973 = 4.973% 4.973 % is a more accurate measure of the average return over the 2000-04 period than 5.45% MAY 5 tv 4 W X 000 F5100% + 5/7 International Economic Trends Reference Tables 2007 Consumer Price Index 2004 2005 2006 2001 2002 2003 Percent change from year ago 1999 2000 3.5 2.3 1997 1998 2. 2.7 1995 1996 2.8 4.5 4.4 3.C 2.2 0.9 1.5 Australia 4.6 2.6 0.2 1.3 2.0 2.1 1.7 2.0 2.3 1.2 0.8 0.5 2.0 2.1 1.8 1.9 2.2 1.6 23 2.8 Austria 25 1.7 27 1.0 3.0 3.4 4.4 2.1 1.6 1.6 2.5 2.8 1.1 Canada 3.8 3.6 6.1 5.1 3.3 1.8 1.5 4.8 8.2 74 -0.8 1.2 3.9 Chile -0.9 -1.4 0.3 0.5 8.3 2.1 12 1.8 1.9 1.7 2.8 China 17.1 2.4 2.4 21 22 1.8 2.5 2.9 2.1 2.1 2.1 2.1 2.2 2.2 Denmark 1.7 1.1 2.4 2.3 1.2 2.2 1.6 2.6 2.1 1.3 0.1 0 .8 1.3 Euro Area 1.2 1.3 1.3 2.9 2.7. 2.0 1.9 1.9 1.6 1.1 2.3 Finland 0.4 1.8 1.8 1.9 2.2 18 2.1 1.3 0.7 0.6 1.8 2.3 France 1.0 1.8 1.9 0.6 0.6 1.4 1.9 1.4 3.0 Germany 1.2 1.5 3.3 3.4 3.0 3.5 3.9 7.9 5.4 4.5 2.9 3.7 6.2 13.1 6.4 Greece 6.6 10.5 8.0 6.2 58.4 20.5 3.7 11.5 11.9 Indonesia 9.4 4.7 4.0 2.3 2.2 2.7 2.9 2.2 1.3 2.1 2.5 5.3 4.0 0.7 1.3 2.1 0 .5 Ireland 5.7 -0.4 9.0 5.5 5.2 1.1 Israel 10.0 11.3 2.2 2.2 2.0 1.7 2.6 2.3 2.6 2.8 2.3 Italy 5.4 4.0 1.9 2.0 -0.2 -0.0 .0.3 0.2 0.1 0.7 -0.3 -07 -0.8 -0.9 Japan -0.1 0.1 1.8 2.8 2.5 2.8 3.5 3.6 2.2 4.5 4.9 4.4 7.5 0.8 2.3 4.0 Korea 3.6 1.5 1.4 1.0 2.0 1.8 1.5 3.0 Malaysia 3.4 3.5 2.7 5.3 2.7 5.0 4.5 4.7 4.0 3.6 4.0 16.6 Mexico 35.0 34.4 20.6 15.9 9.5 6.4 2.0 2.3 5.1 3.9 2.2 1.4 1.5 1.7 1.6 Netherlands 1.4 1.5 1.9 1.8 2.6 2.6 2.7 1.8 2.3 3.0 3.4 2.4 1.3 -0.1 New Zealand 3.8 2.3 1.2 2.5 0 .5 1.5 2.3 0 .7 2.4 1.2 2.6 2.3 2.3 3.1 3.0 1.3 Norway 3.0 5.9 7.6 6.3 2.8 Philippines 8.0 9.0 5.9 97 6.7 -0.2 6.8 3.6 0.0 1.4 1.0 -0.4 0.5 1.6 0.5 1.0 2.1 Singapore 1.7 1.4 20 -0.3 5.2 5.3 5.7 9.2 5.9 1.4 3.4 4.6 7.1 South Africa 8.7 7.4 8.6 6.9 3.5 2.8 3.6 3.1 3.1 3.4 3.6 2.8 Spain 4.6 3.6 1.9 1.8 2.2 2.4 2.2 1.9 0.4 0.5 1.4 2.2 Sweden 2.5 0.5 0.7 -0.3 0.5 0.9 1.2 0.7 Switzerland 1.8 0.8 0.5 0.0 0.8 1.6 1.0 0.6 0.6 0.8 1.1 Thailand 5.8 5.8 5.6 8.1 0.3 1.6 1.7 0. 6 1.8 2.8 4.6 4.6 2.2 8 .8 Turkey 39.1 80.4 85.7 84.6 64.9 54.9 54.4 45.0 21.6 8.6 8.2 9.6 United Kingdom 2.5 1.8 1.6 1.3 0.8 1.2 1.3 1.4 1.3 2.1 2.3 2.3 2.7 28 2.9 23 15 2.2 34 28 16 34 United States 23 27 3.2 MAY 5 .... A WBb Microsoft Word - question: X Mi Inbox (1,911) - csingh15@l x rd.learn.xythos.prod/57c93be5643d6/12578287?X-Blackboard-Expiration=1620259200000&X-Blackboard-Signature=2AbVBZOw X 100% + 6/7 International Economic Trends Reference Tables 2006 2007 2003 2004 2005 Exchange Rates Percent appreciation (+) or depreciation (-) of the U.S. dollar against the local currency 2001 2002 1.2 -10.1 1998 1999 2000 11.5 3.4 1996 1997 12.5 4.9 -16.7 1995 64 -5.3 -2.4 11.0 7.1 -5.3 5.3 18.1 1.4 10.8 -1.3 4.3 Australia .1 D.O 5.3 1.5 1.6 7.1 11.8 8.2 0.7 0.4 0.5 61 17.7 8.5 -2.7 -4.6 Canada 3.8 10.5 O.C 1.0 -5.6 3.9 1.7 -O.C .C 0.0 Chile 0.0 0.9 -8.4 0.2 0.3 0.1 -0.2 90 3.1 2.9 5.3 16.6 China 1. 2 15.9 0.1 0.9 -8.4 13.9 1.4 Denmark -11.8 3.5 6.3 16.5 14 15. 3.1 5.6 .0.2 13.9 1.6 4.2 8.6 Euro Area -8.7 2.3 21.8 9.3 7. -21.6 7.2 0.7 7.8 4,1 4.2 24.2 44.2 3.9 1.6 0.1 Indonesia 15 3.1 12.7 5.6 1.2 10.2 18 6:0 8. 7.5 Israel 0.0 6.7 5.2 12.7 3. 11.3 8.0 -13.1 6.8 2.6 7.9 15.6 3.9 -10.6 Japan 4.9 14.2 3.2 4.7 47.2 -15.3 -3.2 -6.3 Korea 4.2 4.2 18.5 -0.0 0.0 -0.3 0.0 0.0 0.0 12.0 39.3 3.2 0.0 0.3 4.4 0.3 .6 3.4 Malaysia -1.2 3.4 11.7 -1.1 18.4 4.2 15.4 4.6 8.4 Mexico 90.2 5.7 -11.7 -9.5 20.2 -12.4 23.4 1.4 15.9 8.7 4.6 3.8 New Zealand 4.4 -0.5 -8.7 .9.5 4.8 12.9 2.1 11.2 -11.4 1.9 9.6 6.6 3.3 6.8 -10.1 Norway 10.2 12 5.0 3.4 -1.7 38.8 4.4 13.1 15.4 Philippines 2.7 2.0 12.4 3.0 1.5 4.6 -5.2 -0.1 14 1.8 3.9 5.4 12.5 Singapore 7.2 0.5 28. -14.7 -1.4 6.4 4.2 20.0 10.6 13.6 24.2 1.9 2.1 7.2 South Africa 18.5 .9.1 1.3 -8.4 1.0 12.7 -6.0 -16.9 1.7 Sweden -7.5 6.0 13.9 4.1 3.9 .7.6 0.3 0.6 -4.3 -0.1 37 12.5 -0.1 7.8 -13.6 Switzerland 13.5 4.6 17.3 3.1 -0.1 -5.9 -15.0 -8.3 6.2 10.7 3.3 -3.4 22.5 Thailand 0.9 1.7 33.0 96.0 6.3 -8.8 60.6 49.3 23.0 04 -5.0 5.7 54.8 77.6 71.7 Turkey 86.6 8.1 10.8 0.7 1.3 -7.9 42 1.2 2.4 6.7 5.3 United Kingdom -2.9 1.1 -4.7 1.5 12.3 -8.2 -1.9 1.5 5.6 United States 5.6 4.5 7.7 48 -1.6 49 6.0 10.5 2.7 0.0 Venezuela 19.0 136.1 17.1 12.0 10.6 12.3 6.5 60.4 38.4 17.7 Percent appreciation (+) or depreciation (-) of the U.S. dollar against a group of currencies MAY 5 . ... tv W XA $ 2 - ) 74% [4 Wed M Bb Microsoft Word - question x Mi Inbox (1,911) - csingh15@) x M ShowTix4U - Ticket Inform x Order 1807212 - EssayPro x Home X board.learn.xythos.prod/57c93be5643d6/12578287?X-Blackboard-Expiration=1620259200000&X-Blackboard-Signature=2AbVBZOwDk17WIN6Pugc 717 100% + Reference Tables International Economic Trends 2007 Short-Term Interest Rates 2004 2005 2006 2003 1999 2000 2001 2002 Annual percent 1995 1996 1997 1998 5.5 5.6 6.0 6.7 5.0 6.2 B'b 4.8 7.2 5.4 5.0 3.5 4.3 Australia 7.7 2.9 2.7 2.6 5.8 2.1 5.0 5.1 5.9 4.6 5.2 5.6 3.1 3.9 Canada 27 19 14.9 8.6 9.2 6.2 3.8 3.3 13.7 13.5 12.0 3,3 3.3 3.3 Chile 2.7 4.6 3.2 3.2 3.2 2.7 4.3 China 10.4 9.0 8.6 2.2 3.1 4.1 4.9 4.6 3.5 2.4 2.1 3,7 3.3 6.1 3.9 3.1 4.3 Denmark 4.4 4.3 3.3 2.3 2.1 2.2 4.0 8.0 6.8 5.1 4.4 3.0 Euro Area 10.6 6.4 8.1 11.4 12.5 15.5 15.5 16.7 17.3 20.0 39.1 25.7 Indonesia 4.8 4.3 5.5 6.5 7.4 7.0 14.4 15.3 13.4 11.3 11.4 8.8 0.0 0.2 0.7 Israel 0.2 0.1 0.1 0.0 0.0 0.6 0.7 4.8 Japan' 1.2 0.6 0.2 5.2 4.7 4.2 4.0 3.7 3.4 4.2 15.0 3.4 Korea 12.6 12 4 13.3 5.0 2 .8 2.7 2.8 2.4 2.5 3.2 3.5 2.9 Malaysia 5.5 6.4 6.4 6.9 7.4 9 .6 7.7 7.8 22.3 27.1 24.6 17.2 13.4 8.5 7.2 Mexico 18.2 32.9 7.1 7.5 8.3 5.7 5.7 5.4 6.1 New Zealand 9.0 9.3 7.7 7.3 4.8 6.5 6.9 4.1 2.0 2.2 3.1 5.0 5.5 4.9 3.7 5.8 6.5 6.7 7.2 Norway 9.7 5.5 5.9 7.3 6.1 5.3 3.4 12.3 12.9 15.0 10.0 9.9 Philippines 1.8 0.7 1.0 2.3 3.5 2.7 2.0 1.0 Singapore 26 2.9 4.4 5.0 2.0 2.6 10.1 9.7 10.7 7.5 9 .1 12.9 11.2 6.9 7.3 South Africa 13.5 15.0 15.3 16.5 3.0 2.1 2.3 3.6 4.1 1.7 8.7 5.8 4.1 4.2 3.1 4.0 4.0 Sweden 0.5 1.6 2.6 2.0 1.6 1.5 1.4 3.2 2.9 1.1 0.3 0.8 Switzerland 2.9 1.7 2.1 1.6 1.0 1.8 3.8 4.9 3.2 Thailand 0.3 12.1 21.7 2.6 1.2 17.9 18.2 70.3 74.6 73.5 38.9 92.4 59.5 38.5 23.8 15.6 Turkey 72.3 76.2 5.0 40 3.7 4.6 4.7 4.8 6.0 United Kingdom 6.7 6.0 6.8 7.3 5.4 6 .1 5.3 3.7 1 7 1.2 16 3.5 5.2 United States 5.4 5.6 5.5 5.3 65 28 5 45 0 45.0 60 0 38 0 49.0 38.0 37.0 & 40.0 28.5 28.5 28.5 28.5 Venezuela "The actual value for 2003 is 0.037; the actual value for 2004 is 0.029; the actual value for 2005 is 0.029. MAY W X 5 .... &tv 4
