国际金融英文版习题Chapter3.docx
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国际金融英文版习题Chapter3
国际金融英文版习题Chapter-3
INTERNATIONALFINANCE
AssignmentProblems(3)Name:
Student#:
I.Choosethecorrectanswerforthefollowingquestions(onlyONEcorrectanswer)(2creditsforeachquestion,totalcredits2x25=50)
1.InterbankquotationsthatincludetheUnitedStatesdollarsareconventionallygivenin__________,whichstatetheforeigncurrencypriceofoneU.S.dollar,suchasabidpriceofSFr0.85/$.
A.indirectquote
B.directquote
C.Americanquote
D.Europeanquote
2.Thespotexchangeratepublishedinfinancialnewspapersisusuallythe__________.
A.nominalexchangerate
B.realexchangerate
C.effectiveexchangerate
D.equilibriumexchangerate
3.Theforeignexchangereferstothe__________.
A.foreignbanknotesandcoins
B.demanddepositsinforeignbanks
C.foreignsecuritiesthatcanbeeasilycashed
D.alloftheabove
4.Thefunctionsoftheforeignexchangemarketcomedownto__________.
A.convertingthecurrencyofonecountryintothecurrencyofanother
B.providingsomeinsuranceagainsttheforeignexchangerisk
C.makingtheforeignexchangespeculationeasy
D.OnlyAandBaretrue.
5.WhichofthefollowingisNOTtrueregardingtheforeignexchangemarket?
A.Itistheplacethroughwhichpeopleexchangeonecurrencyforanother.
B.Theexchangeratenowadaysismainlydeterminedbythemarketforces.
C.Mostforeignexchangetransactionsarephysicallycompletedinthismarket.
D.Alloftheabovearetrue.
6.Theworldlargestforeignexchangemarketsare__________respectively.
A.London,NewYorkandTokyo
B.London,ParisandFrankfurt
C.London,HongKongandSingapore
D.London,ZurichandBahrain
7.TheforeignexchangemarketisNOTefficientbecause__________.
A.monetaryauthoritiesdominatetheforeignexchangemarketandeverybodyknowsthatbydefinition,centralbanksareinefficient
B.commercialbanksandotherparticipantsofthemarketdonotcompetewithoneanotherduetothefactthattransactiontakesplacearoundtheworldandnotinasinglecentralizedlocation
C.foreignexchangedealershavedifferentpricessuchasbidandaskprices
D.Noneofthereasonslistedarecorrectbecausetheforeignexchangemarketisanefficientmarket
8.__________earnaprofitbyabid-askspreadoncurrenciestheybuyandsell.__________ontheotherhand,earnaprofitbybringingtogetherbuyersandsellersofforeignexchangesandearningacommissiononeachsaleandpurchase.
A.Foreignexchangebrokers;foreignexchangedealers
B.Foreignexchangedealers;foreignexchangebrokers
C.arbitragers;speculators
D.commercialbanks;centralbanks
9.MostforeignexchangetransactionsarethroughtheU.S.dollars.Ifthetransactionisexpressedasthecurrenciesperdollar,thisisknownas__________whereas__________areexpressedasdollarspercurrency.
A.directquote;indirectquote
B.indirectquote;directquote
C.Europeanquote;Americanquote
D.Americanquote,Europeanquote
10.FromtheviewpointofaJapaneseinvestor,whichofthefollowingwouldbeadirectquote?
A.SFr1.25/€
B.$1.55/₤
C.¥110/€
D.€0.0091/¥
11.Whichofthefollowingistrueabouttheforeignexchangemarket?
A.Itisaglobalnetworkofbanks,brokers,andforeignexchangedealersconnectedbyelectroniccommunicationssystem.
B.Theforeignexchangemarketisusuallylocatedinaparticularplace.
C.Theforeignexchangeratesareusuallydeterminedbytherelatedmonetaryauthorities.
D.Themainparticipantsinthismarketarecurrencyspeculatorsfromdifferentcountries.
12.Theextenttowhichtheincomefromindividualtransactionsisaffectedbyfluctuationsinforeignexchangevaluesisconsideredtobe_________.
A.Translationexposure
B.economicexposure
C.transactionexposure
D.accountingexposure
13.Whichofthefollowingexchangeratesisadjustedforpricechanges?
A.nominalexchangerate
B.realexchangerate
C.effectiveexchangerate
D.equilibriumexchangerate
14.SupposetheexchangerateoftheRMBversusU.S.dollaris¥6.8523/$now.IftheRMBweretoundergoa10%depreciation,thenewexchangerateintermsof¥/$wouldbe:
A.6.1671B.7.5375C.6.9238D.7.6135
15.AtleastinaU.S.MNC’sfinancialaccountingstatement,ifthevalueoftheeurodepreciatesrapidlyagainstthatofthedollaroverayear,thiswouldreducethedollarvalueoftheeuroprofitmadebytheEuropeansubsidiary.Thisisatypical__________.
A.transactionexposure
B.translationexposure
C.economicexposure
D.operatingexposure
16.AJapanese-basedfirmexpectstoreceivepound-paymentin6months.Thecompanyhasa(an)__________.
A.economicexposure
B.accountingexposure
C.longpositioninsterling
D.shortpositioninsterling
17TheexposuretoforeignexchangeriskknownasTranslationExposuremaybedefinedas__________.
A.changeinreportedowner’sequityinconsolidatedfinancialstatementscausedbyachangeinexchangerates
B.theimpactofsettlingoutstandingobligationsenteredintobeforechangeinexchangeratesbuttobesettledafterchangeinexchangerates
C.thechangeinexpectedfuturecashflowsarisingfromanunexpectedchangeinexchangerates
D.Alloftheabove
triangulararbitrage?
Ifso,showstepsandcalculatetheamountofprofitinSwissfrancs.(8credits)
12.Ifthedollarappreciates1000%againsttheruble,bywhatpercentagedoestherubledepreciateagainstthedollar?
(5credits)
13.Asapercentageofanarbitrarystartingamount,abouthowlargewouldtransactionscostshavetobetomakearbitragebetweentheexchangeratesSSFr/$=SFr1.7223/$,S$/¥=$0.009711/¥,andS¥/SFr=¥61.740/SFrunprofitable?
Explain.(7credits
14.Youaregiventhefollowingexchangerates:
S¥/A$=67.05–68.75
S£/A$=0.3590–0.3670
CalculatethebidandaskrateofS¥/£:
(5credits)
15.SupposethespotquotationontheSwissfranc(CHF)inNewYorkisUSD0.9442–52andthespotquotationontheEuro(EUR)isUSD1.3460–68.Computethepercentagebid-askspreadsontheCHF/EURquote.(5credits)
AnswerstoAssignmentProblems(3)
PartI
1.D
2.A
3.D
4.D
5.D
6.A
7.D
8.B
9.C
10.C
11.A
12.A
13.B
14.D
15.B
16.C
17.A
18.D
19.B
20.A
21.B
22.B
23.C
24.C
25.D
PartII
1.0.70x(105.3/102.5)=0.7x1.0273=0.7191
2.12.2x(105.3/110.5)=12.2x.9529=11.6259
3.B(0.7/.75)–1=-6.67%
4.D(1/12.2)/(1/11.8)–1=-3.28%
5.550
6.360
7.550/910=60.44%
8.360/910=39.56
9.(0.70/0.75)(60.44%)+(12.2/11.8)(39.56%)=.5641+0.4090=.9731=97.31%
10.weaker,becausedollardepreciatedby2.69%.
11.SinceS¥/$S$/SFrSSFr/¥=80x1/0.8900x1/95.00=0.946186<1,thereisanarbitrageopportunity.
Steps:
①Buy¥fromDeutscheBank,SFr10millionx95.00=¥950million
②Buy$fromFujiBank,$950m/80.00=$11.875m
③BuySFrfromUBS,$11.875x0.8900=SFr10.56875m
Profit(ignoringtransactionfees):
SFr10.56875–SFr10=0.56875million=568,750
12.(x–1)=1000%;1/11–1=90.9%
13.SSFr/$S$/¥S¥/SFr=SFr1.7223/$x$0.009711/¥x¥61.740/SFr=1.0326
Iftransactioncostsexceed$0.0326(3.26%),thearbitrageisunprofitable.
14.Given:
S¥/A$=67.05–68.75
S£/A$=0.3590–0.3670
So,S¥/₤=67.05/0.3670=182.70(bid)
S£/₤=68.75/0.3590=191.50(ask)
15.Given:
USD0.9442–52/SFr
USD1.3460–68/SFr
So,SSRr/€=1.3460/0.9452=1.424(bid)
SSFr/€=1.3468/0.9442=1.4264(ask)
Bid-askmargin=(1.4264–1.424)/1.4264=0.1683%