Suppose the Japanese yen exchange rate is108 = $1 and the British pound exchange rate is1 = $1.31.

What is the cross-rate in terms of yen per pound?

 

 The treasurer of a major U.S. firm has $31,092,090 to invest for three months .The annual interest rate in the United States is 0.38% per month.The interest rate in Great Britain is 0.55% per month .The spot exchange rate is0.7,and the three-month forward rate is0.74.Ignoring transaction costs, what would be the NPV of investing in Great Britain as opposed to invest in the U.S.? 

 

Suppose the current exchange rate for the Polish zloty is Z3.41.The expected exchange rate in 3 years.The expected exchange rate in 3years is Z3.57. What is the difference in the annual inflation rates for the United States and Poland over this period?Assume that the anticipated rate is constant for both countries.

Suppose your company imports computer motherboards from Singapore.The exchange rate is$1.4471per Singapore dollar.You have just placed an order for 37,581motherboards at a cost to you of S157Singapore dollars each.You will pay for the shipment when it arrives in 90 days.You can sell the motherboards for $111each. Calculate your profit if the exchange rates goes up by 11.42% over the next 90 days.

Suppose your company imports computer motherboards from Singapore.The exchange rate is$1.4791per Singapore dollar.You have just placed an order for 43,347motherboards at a cost to you of S154Singapore dollars each.You will pay for the shipment when it arrives in 90 days.You can sell the motherboards for $111each. Calculate your profit if the exchange rates goes down by 8.55% over the next 90 days.

Suppose your company imports computer motherboards from Singapore.The exchange rate is$1.4472per Singapore dollar.You have just placed an order for 43,691motherboards at a cost to you of S159Singapore dollars each.You will pay for the shipment when it arrives in 90 days.You can sell the motherboards for $117each. What is the break-even exchange rate?

LakonishokEquipment has an investment opportunity in Europe. The project costs 22,337,619 and is expected to produce cash flows of 3,255,122 in Year 1,4,698,248 in Year 2, and5,077,146in Year 3. The current spot exchange rate is $1.19/and the current risk-free rate in the United States is 3.22%, compared to that in Europe of 2.86%. The appropriate discount rate for the project is estimated to be 11.17%, the U.S. cost of capital for the company. In addition, the subsidiary can be sold at the end of three years for an estimated13,477,058. What is the NPV of the project?