Deck 3: Country Risk and Currency Markets

Question 1

Which of the following is correct? The spot and 30 day forward rates for the euro are $1.4757 and $1.48, respectively. The euro is said to be selling at a forward

A) premium of 1.2%
B) premium of 3.5%
C) discount of 3.5%
D) discount of 1.2%

Answer 1

premium of 3.5%

Question 2

Suppose the British pound is quoted at $1.4419-36, and the Swiss franc is quoted at $0.6250-67. What is the direct quote for the British pound in Zurich?

A) 2.3035-70
B) 2.3018- 88
C) 2.3008-98
D) 2.3020-50

Answer 2

2.3008-98

Question 3

Suppose the Brazilian Real is quoted at $0.9455-9510, and the Thai baht is quoted at $25.2513-3986. What is the direct quote for the Real in Bangkok?

A) 27.1267-5673
B) 26.7801-9801
C) 25.2597-2700
D) 26.5524-8626

Answer 3

26.5524-8626

Question 4

If the direct price of the U.S. dollar is Malaysian ringgit is MYR 2.5 in Kuala Lumpur and transaction costs were .4% of the amount transacted, then the minimum? maximum direct quotes for the ringgit in New York are:

A) $.3968-4032
B) $2.4800-2.5200
C) $.3984-.4016
D) $2.4900-2.5100

Question 5

The spot and 180 day forward rates for the euro are $1.3310 and $1.3402, respectively. Which of the following is correct? The euro is said to be selling at a forward

A) discount of 6.9%
B) premium of 6.9%
C) discount of 1.4%
D) premium of 1.4%

Question 6

On December 3,2001, spot Japanese yen were sold at $0.008058. Suppose the 180-day forward Japanese yen was selling at a 1.91% annualized premium, what is the 180-day forward rate of the yen?

A) 0.008245
B) 0.008135
C) 0.008457
D) 0.010638

Question 7

The $/MYR exchange rate is MYR1 = $.35 and the MYR/AED exchange rate is AED1 = MYR.31. What is the AED/$ exchange rate?

A) 3.226 AED per dollar
B) 1.129 AED per dollar
C) .886 AED per dollar
D) 9.217 AED per dollar

Question 8

Suppose the British pound is selling for $1.62 and the buying rate for the Swiss franc is $0.71. Which of the following is correct? Then the £/SFr cross rate is

A) £1 = SFr 0.4383
B) SFr 1 = £2.2817
C) £1 = SFr 2.2817
D) SFr 1 = £1.2817

Question 9

Suppose the quote for euro is $.9865-92/€. Which of the following is correct? The percent spread is

A) 2.31%
B) 0.97%
C) 0.62%
D) 0.27%

Question 10

Complete the sentence correctly. The economic experiences of Mexico, Chile, and Argentina in the recent past show that they all possessed a_________.

A) political party system of many factions
B) loosely drawn economic plan that is allowed to evolve over time
C) political lead who is more of a manager than a leader
D) head of state who demonstrates strong will and leadership