QUESTION 21

1. If the direct price of the USD is DM2.7 in 1990 Frankfurt and transaction costs were 0.43% of the amount transacted, then the minimum maximum direct quotes for the DM in New York were:

a.

$0.3672-0.3736

b.

$0.3730-0.3762

c.

$2.5891-2.6109

d.

$2.5779-2.6218

QUESTION 22

1. Suppose it is January 1980 and the $/DM exchange rate is DM1 = $0.36 and the DM/FF exchange rate is FF1 = DM0.39. What is the FF/$ exchange rate?

a.

3.226 French Frank per dollar

b.

4.886 French Frank per dollar

c.

8.129 French Frank per dollar

d.

7.123 French Frank per dollar

QUESTION 23

1. Suppose it is January 1, 1994, and the Deutsche mark revalues from $0.31 at the beginning of the year to $0.35 at the end of the year. Inflation during the year is 5.2% in the U.S. and 3.5% in Germany. What is the real devaluation () or real revaluation (+) of the Deutsche mark during the year?

a.

2.60%

b.

7.30%

c.

11.02%

d.

9.10%

QUESTION 24

1. The spot and 30day forward rates for the Dutch Guilder are $1.475 and $1.481, respectively. The Dutch Guilder is said to be selling at a forward

a.

discount of 4.9%

b.

premium of 5.2%

c.

premium of 4.9%

d.

discount of 5.2%