FIN 534 Week 11 Quiz

FIN 534 Week 11 Quiz

Question 1

2 out of 2 points

	Suppose DeGraw Corporation, a U.S. exporter, sold a solar heating station to a Japanese customer at a price of 143.5 million yen, when the exchange rate was 140 yen per dollar.  In order to close the sale, DeGraw agreed to make the bill payable in yen, thus agreeing to take some exchange rate risk for the transaction.  The terms were net 6 months.  If the yen fell against the dollar such that one dollar would buy 154.4 yen when the invoice was paid, what dollar amount would DeGraw actually receive after it exchanged yen for U.S. dollars? Answer

·         Question 2

2 out of 2 points

	Suppose 144 yen could be purchased in the foreign exchange market for one U.S. dollar today.  If the yen depreciates by 8.0% tomorrow, how many yen could one U.S. dollar buy tomorrow? Answer

·         Question 3

0 out of 2 points

	Suppose one British pound can purchase 1.82 U.S. dollars today in the foreign exchange market, and currency forecasters predict that the U.S. dollar will depreciate by 12.0% against the pound over the next 30 days. How many dollars will a pound buy in 30 days? Answer

·         Question 4

2 out of 2 points

	Suppose 6 months ago a Swiss investor bought a 6-month U.S. Treasury bill at a price of $9,708.74, with a maturity value of $10,000.  The exchange rate at that time was 1.420 Swiss francs per dollar.  Today, at maturity, the exchange rate is 1.324 Swiss francs per dollar.  What is the annualized rate of return to the Swiss investor? Answer

·         Question 5

2 out of 2 points

	A box of candy costs 28.80 Swiss francs in Switzerland and $20 in the United States.  Assuming that purchasing power parity (PPP) holds, what is the current exchange rate? Answer

·         Question 6

2 out of 2 points

	Suppose one year ago, Hein Company had inventory in Britain valued at 240,000 pounds.  The exchange rate for dollars to pounds was 1£ = 2 U.S. dollars.  This year the exchange rate is 1£ = 1.82 U.S. dollars.  The inventory in Britain is still valued at 240,000 pounds.  What is the gain or loss in inventory value in U.S. dollars as a result of the change in exchange rates? Answer

·         Question 7

2 out of 2 points

	Which of the following is NOT a reason why companies move into international operations? Answer

·         Question 8

2 out of 2 points

	If one U.S. dollar buys 1.64 Canadian dollars, how many U.S. dollars can you purchase for one Canadian dollar? Answer

·         Question 9

2 out of 2 points

	If the inflation rate in the United States is greater than the inflation rate in Britain, other things held constant, the British pound will Answer

·         Question 10

2 out of 2 points

	In 1985, a given Japanese imported automobile sold for 1,476,000 yen, or $8,200.  If the car still sold for the same amount of yen today but the current exchange rate is 144 yen per dollar, what would the car be selling for today in U.S. dollars? Answer

·         Question 11

2 out of 2 points

	Suppose the exchange rate between U.S. dollars and Swiss francs is SF 1.41 = $1.00, and the exchange rate between the U.S. dollar and the euro is $1.00 = 1.64 euros.  What is the cross-rate of Swiss francs to euros? Answer

·         Question 12

2 out of 2 points

	Suppose hockey skates sell in Canada for 105 Canadian dollars, and 1 Canadian dollar equals 0.71 U.S. dollars.  If purchasing power parity (PPP) holds, what is the price of hockey skates in the United States? Answer

·         Question 13

2 out of 2 points

	If one Swiss franc can purchase $0.71 U.S. dollars, how many Swiss francs can one U.S. dollar buy? Answer

·         Question 14

2 out of 2 points

	Suppose 90-day investments in Britain have a 6% annualized return and a 1.5% quarterly (90-day) return.  In the U.S., 90-day investments of similar risk have a 4% annualized return and a 1% quarterly (90-day) return.  In the 90-day forward market, 1 British pound equals $1.65.  If interest rate parity holds, what is the spot exchange rate? Answer

·         Question 15

2 out of 2 points

 

	Which of the following statements is NOT CORRECT? Answer

"96% of our customers have reported a 90% and above score. You might want to place an order with us."