Exam 11: Foreign Exchange

The exchange rate is the price at which the ______ of Switzerland exchanges for the ______ of Germany

Table 11.1 gives the exchange rate quotations for the U.S.dollar and the British pound. Table 11.1.Foreign Exchange Quotations -Consider Table 11.1.If one were to sell dollars for immediate delivery,on Tuesday the pound cost of each dollar would be:

The foreign exchange market refers to the organizational setting within which individuals and businesses,but not government and banks,buy and sell foreign currencies and other debt instruments.

Throughout the world,the foreign exchange market is open for business only during the hours of 9 A.M.to 3 P.M.,Pacific Standard Time.

If British interest rates are lower than those of the United States,the pound shows a forward discount which means the forward rate is less than the spot rate.

Answer the next question on the basis of the table below that shows the exchange rate between various currencies and the U.S.dollar December 2015 Exchange Rate December 2016 Exchange Rate Currency (dollars per unit of foreign currency) (dollars per unit of foreign currency) Mexican peso $0.07 $0.09 Swiss franc $1.10 $1.05 Japanese yen $0.010 $0.012 British pound $1.64 $1.58 -When the exchange rate (dollars per pound) falls,the