CFA Level I:Economics - Aggregate output, price, and economic growth 学习要点和习题精选 percentage, interpret, expressed, economic, currency

Wendy01

Learning Outcome Statements (LOS)
  

a Define an exchange rate, and distinguish between nominal and real exchange rates and spot and forward exchange rates;
  

b Describe functions of and participants in the foreign exchange market;
  

c  Calculate and interpret the percentage change in a currency relative to another currency;
  

d  Calculate and interpret currency cross-rates;   
  

e  Convert forward quotations expressed on a points basis or in percentage terms into an outright forward quotation;
        

f  Explain the arbitrage relationship between spot rates, forward rates and interest rates;
  

g Calculate and interpret a forward discount or premium;
  

h Calculate and interpret the forward rate consistent with the spot rate and the interest rate in each currency;
  

i  Describe exchange rate regimes;
  

j  Explain the impact of exchange rates on countries’ international trade and capital flows;

Wendy01

Exercise Problems:
1. In early 2011, a New Zealand traveler returned from Singapore with SGD7,500 ( Singapore dollar). A foreign exchange dealer provide the traveler with the following quotes: Ratio Spot Rates USD/SGD 1.2600 NZD/USD 0.7670 USD: U.S. Dollar The amount of New Zealand dollar (NZD) that the traveler would receive for his Singapore dollar is closest to: A. 4,565 B. 7,248 C. 7,761		Ans: B; the exchange rates of USD/SGD and NZD/USD are 1.2600 and 0.7670, so NZD/SGD is 0.96642. with the SGD7,500 he has, he could receive NZD7,248.

Wendy01

2. The current spot rate for the USD/EUR is 0.7500. The forward rate for the EUR/Australian dollar (AUD) is 1.4300, which represents a 400 point forward premium to the spot rate (scaled up by four decimal place). The USD/AUD spot rate is closest to:    A. 1.0296 B. 1.0425 C. 1.1154

Ans: B; the forward rate of EUR/AUD is 1.4300 with 400 point forward premium, so the spot exchange rate is 1.3900. and the spot rate of USD/EUR is 0.7500, so USD/AUD is

Wendy01

3.      In the classification of currency regimes, a currency board system (CBS) most likely differs from a fixed-rate parity system in that:

A.    a CBS has a discretionary target level of foreign exchange reserves.

B.     a CBS can peg to a basket of currencies but a fixed-rate system cannot.

C.     the monetary authority within a CBS does not act as a traditional lender of last resort.

  
    Ans: C; CBS is a monetary regime based on an explicit legislative commitment to exchange domestic currency for a specified foreign currency at a fixed exchange rate, combined with restrictions on the issuing authority to ensure fulfillment of its legal obligation.

Fixed parity system differs from CBS in two respects:

1.       There is no legislative commitment to maintaining the specified parity.

2.       The target level of foreign exchange reserves is dictionary. Thus, although monetary independence is ultimately limited as long as the exchange peg is maintained, the central bank can carry out traditional functions, such as serving as lender of last resort.

So compared to fixed parity, CBS does not act as a traditional lender of last resort.

Wendy01

4. In early 2011, the British pound (GBP) to New Zealand dollar (NZD) spot exchange rate was 2.0979. The LIBOR interest rates, quoted on a 360-day year basis, were 1.6025% for the British pound and 3.2875% for the New Zealand dollar. The 180-day forward points in GBP/NZD would be closest to: A. -343 B. -173 C. 176

Ans: B; if one invests in GBP, in 180 days he will get if one invests in NZD, in 180 days he will get So the 180-day forward exchange rate is So the forward point is forward exchange rate minus the spot exchange rate, which is

syndicate

test done!!

gao_1982

牛B,非常牛B