70.2K

Verified Solution

Link Copied!

1. The interest rate on U.S. government securities with one-year maturity is 3%, and the expected inflation rate for the coming year is 2%. The interest rate on Germany government securities with one-year maturity is 7%, and the expected rate of inflation is 5%. The current spot exchange rate is $2.00/euro, what is the expected spot rate in three years? Group of answer choices

$1.94/euro

$1.83/euro

$2.24/euro

$2.18/euro

2.

Which of the following should be recorded as a debit to the Capital Account?

Group of answer choices

Investment by a U.S. company in Brazil

A French businessmans hotel bill in Miami, Florida

Sale of Dell laptops to British customers

A Swiss pharmaceutical company opens a R&D facility in the U.S.

3.

Suppose that the current exchange rate is 0.80 = $1.00. The indirect quote, from the U.S. perspective is

Group of answer choices

1.00 / $1.25

0.80 / $ 1.00

1.00 / $0.80

none of the options

4.

If the / bid and ask prices are 0.88/ and 0.90/ respectively, the corresponding / bid and ask prices are

Group of answer choices

1.1111 and 1.1364

0.88and 0.90

1.1364 and 1.1111

cannot be determined with the information given.

5.

Suppose the US dollar is quoted in Australia at A$1.2858-74 and the Australian dollar is quoted in US at $0.7763-79.

What is the percent spread for US dollar in US?

Group of answer choices

0.2096%

0.2100%

0.1157%

0.1159%

Answer & Explanation Solved by verified expert

See Answer