Exam 19: International Corporate Finance

Convert the following direct quote to a dollar indirect quote: 1 Israeli shekel = $0.2351

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

If you are told that $1 will buy 25 Korean wons, then you were given a(n):

The current spot rate between the U.S. dollar and the Swedish krona is $1 = 7.5500 krona. If the inflation rate in the United States is 4 percent and in Sweden is 1 percent, then what is the expected spot rate in one year?

Which of the following is the theory relating the expected adjustment needed in the future spot exchange rate between countries to the inflation rate in each country?

Which of these is defined as an exchange rate regime where the country's central bank allows its currency price to float freely between an upper and lower bound and may buy and sell large amounts of it in order to provide price support or resistance?

Which of these is defined as a contractual agreement that states the exchange rate to be used at a future exchange date?

Compute the amount of foreign currency that can be purchased for $1,300,000: 1 Thai baht = $0.03057

Suppose exchange rates between the U.S. dollar and the Mexican peso is 11.45 peso = $1 and the exchange rate between the U.S. dollar and the euro is $1 = 1.0866 euros. What is the cross-rate of the Mexican peso to the euro?

If the spot rate between the U.S. dollar and the Mexican peso is $1 = 2.45 peso and the 3-month forward rate is $1 = 2.05 pesos, is the forward peso selling at a discount or a premium?

Given these two exchange rates, $1 = 1.32 Australian dollars and $1 = £0.56, compute the cross-rate between the Australian dollar and the pound. State this exchange rate in Australian dollars.

All of the following are ways that a multinational corporation can minimize the impact of political risk EXCEPT:

A financial manager has determined that the appropriate discount rate for a foreign project is 12 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 10 percent, respectively.

Convert the following indirect quote to a dollar direct quote: $1 = 2,150.4 Venezuelan bolivar

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?

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

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?

Arbitrage profit can be made by:

If the price of silver in England is £6.85 per ounce, what is the expected price of silver in the United States if the spot exchange rate is $1 = £0.5426?

Compute the amount of foreign currency that can be purchased for $600,000: 1 Korean won = $0.001045