Exam 19: International Corporate Finance

Assume the spot rate between the U.S. dollar and the Taiwan dollar is $1 = TWD32.456. If the interest rate in the United States is 4 percent and in Taiwan is 3 percent, then what should be the one-month forward exchange rate?

Compute the amount of foreign currency that can be purchased for $400,000: 1 Indian rupee = $0.02250

If gold is selling in the U.S. for $1,015 per ounce and if 1 peso = $0.35, then gold should sell for ________ in Mexico.

A financial manager has determined that the appropriate discount rate for a foreign project is 15 percent. However, that discount rate applies in the United States using dollars. What discount rate should be used in the foreign country using the foreign currency? The inflation rates in the United States and in the foreign country are expected to be 8 percent and 4 percent, respectively.

All of the following are examples of factors that affect trading activity between countries EXCEPT:

Which of the following is a theory that the difference in interest rates between two countries is equal to the difference between the forward currency exchange rate and the spot exchange rate?

Assume the U.S. dollar spot exchange rate with the Canadian dollar is $1 = CA$1.125. The U.S. dollar and Swiss Franc exchange rate is $1 = 1.235. If the cross rate between the franc and Canadian dollar is 1 franc = CA$0.9820, then show that an arbitrage is possible. What positions should be taken to profit from the mispricing?

Compute the number of dollars that can be bought with 1 million of foreign currency units: $1 = 3.8249 Saudi Arabian riyal

If the price of copper in Europe is €2.72 per ounce, what is the expected price of copper in the United States if the spot exchange rate is $1 = €0.8623?

Convert each of the following indirect quotes to dollar direct quotes: $1 = 805 Vietnam dong $1 = 2,349.6 Venezuelan bolivar $1 = 7.0523 South African rand $1 equals:

All of the following are ways to conduct international business EXCEPT:

The Russian financial crisis of 1998 caused Russia's currency to be dramatically devalued. What is the percentage change in value of a $100 million investment in Russia when the exchange rate changes from $1 = 6 rubles to $1 = 25 rubles?

Convert the following indirect quote to a dollar direct quote: $1 = 48.210 Philippine peso

A financial manager has determined that the appropriate discount rate for a foreign project is 15 percent. However, that discount rate applies in the United States using dollars. What discount rate should be used in the foreign country using the foreign currency? The inflation rates in the United States and in the foreign country are expected to be 5 percent and 7 percent, respectively.

The U.S. dollar spot exchange rate with the Australian dollar is $1 = AU$1.2835. The U.S. dollar and euro exchange rate is $1 = €0.7605. If the cross-rate between the euro and Australian dollar is €1 = AU$1.610 then show that an arbitrage is possible. What positions should be taken to profit from the mispricing?

In the late 1990s, many East Asian currencies suddenly and dramatically devalued. What is the percentage change in the value of a $75 million investment in Indonesia when the exchange rate changes from $1 = 1,000 rupiah to $1 = 7,000 rupiah?

Compute the number of dollars that can be bought with 2 million of foreign currency units: $1 = 48.210 Philippine peso

Compute the number of dollars that can be bought with 1 million of each foreign currency units: $1 = 3.9 Saudi Arabian riyal $1 = 0.52 Philippine peso $1 = 0.75 Latvian lat

A financial manager has determined that the appropriate discount rate for a foreign project is 17 percent. However, that discount rate applies in the United States using dollars. What discount rate should be used in the foreign country using the foreign currency? The inflation rates in the United States and in the foreign country are expected to be 3 percent and 8 percent, respectively.

Which of these is defined as the amount of domestic currency it takes to buy one unit of foreign currency?