Chapter 5 A. Calculate the mid-rates (average)

Chapter 5 A. Calculate the mid-rates (average)

Chapter 5

A. Calculate the mid-rates (average) from the bid ask quotation.

B. Calculate the Forward premium for all maturities using the mid rates calculated in part a).

C. Which maturities have the smallest and largest forward premiums?

Chapter 6

A. What is the export price of the Xterra at the beginning of the year express in U.S. Dollars?

B. Assuming purchasing power parity holds, what should the exchange rate be at the end of the year?

C.Assuming 100% pass-through of exchange rate changes, what should be the dollar price of an Xterra at the end of the year?

D.Assuming 75% pass-through, what should be the price of an Xterra at the end of the year?

CHAPTER 7

A. If you were forecasting the Argentine peso further in to the future, how would you use the information in the graphic-the value of the peso freely floating in the weeks following the devaluation- to forecast its future value?

B.

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