SS NUM: 73 Only answer the e fg question

3 of 3 Q + IL Page view A Read aloud Draw Highlight Erase A SA:, 5) [17 marks] Exchange Rates. Report answers correct to at least 3 decimal places. a. [2 marks] If the spot exchange rate SCHF/CNY = 0.1XX, where XX are the last two digits of your student number (for example, if XX is 49, SCHF/CNY = 0.149), then what is the spot exchange rate ScNY/CHP? b. [2 marks] If the spot exchange rate SAUD/CAD = 1.0XX, and the spot exchange rate SCAD/USD = 1.2XX, where XX are the last two digits of your student number, what is the spot exchange rate SAUD/USD? C. [2 marks] If the spot exchange rate SCNY/AUD = 4.7XX, and the spot exchange rate SUSD/AUD = 0.7XX, where XX are the last two digits of your student number, what is the spot exchange rate SCNY/USD? d. [4 marks] Assume that you are an investor with 1,000 USD in an account and observe the following spot exchange rates: SGBP/USD = 0.7XX (where XX are the last two digits of your student number), SGBP/EUR = 0.8583, SUSD/EUR = 1.1452. Assuming that there are no transaction costs, what foreign exchange trading/investment strategy would you adopt? e. [2 marks] Assume that (i) the one-year forward exchange rate FCHF/EUR = 1.0XX5 (where XX are the last two digits of your student number) (ii) the current spot exchange rate SchF/EUR = 1.0859; and (iii) the one-year interest rate for EUR is i* = 9.23%. What must one-year CHF interest rates be for Covered Interest Parity (CIP) to hold? f. [2 marks] The current value of the spot exchange rate SAUD/CAD = 1.0XX (where XX are the last two digits of your student number). If the Canadian (CAD) inflation rate for the coming year will be 4% while the Australian inflation rate will be 2%, what value of the exchange rate SAUD/CAD 1 year from now would maintain Relative PPP? g. [3 marks] Assume that consumers consume only 2 items: Rent; Food. In Germany, rent for 1 year is EUR 1X,X00 (where XX are the LAST two digits of your student number. For example, if XX is 49, rent is EUR 14,900) and food for 1 year is EUR 7,500. In Australia, rent for 1 year is AUD 20,000 and food for 1 year is AUD 7,500. If the spot exchange rate is SAUD/EUR = 1.616, what is the real exchange rate between Australia and Germany (treat Australia as the domestic country)? At what value of the nominal exchange rate SAUD/EUR would Absolute PPP hold