标题: Reading 18: Currency Exchange Rates-LOS a, (Part 1)习题精选 [打印本页]
作者: 土豆妮 时间: 2010-4-13 15:27 标题: [2010]Session 4-Reading 18: Currency Exchange Rates-LOS a, (Part 1)习题精选
Session 4: Economics: Economics for Valuation
Reading 18: Currency Exchange Rates
LOS a, (Part 1): Define direct and indirect methods of foreign exchange quotations.
The spot exchange rate is USD 0.50 per Alpha. A U.S. importer wants to buy stuffed toys for a total amount of 6 million Alphas. The USD equivalent cost is:
作者: 土豆妮 时间: 2010-4-13 15:27
The spot exchange rate is USD 0.50 per Alpha. A U.S. importer wants to buy stuffed toys for a total amount of 6 million Alphas. The USD equivalent cost is:
Start by computing $0.50 times 6,000,000 Alpha = USD 3,000,000. Dividing 6,000,000 Alpha by $0.50 gives an incorrect answer of USD 12,000,000 and Alpha-denominated choices don’t provide the USD equivalent.
作者: 土豆妮 时间: 2010-4-13 15:27
Which of the following statements about the foreign exchange market is least accurate?
|
A) |
Foreign exchange quotations can be expressed on a direct basis--the foreign currency price of the home currency--or an indirect basis--the home currency price of another currency. | |
|
B) |
In the spot market, currencies are traded for immediate delivery but in the forward market, contracts are made to buy and sell currencies for future delivery. | |
|
C) |
A foreign currency is at a forward discount if the forward rate expressed in domestic currency is below the spot rate, whereas a forward premium exists if the forward rate is above the spot rate. | |
作者: 土豆妮 时间: 2010-4-13 15:27
Which of the following statements about the foreign exchange market is least accurate?
|
A) |
Foreign exchange quotations can be expressed on a direct basis--the foreign currency price of the home currency--or an indirect basis--the home currency price of another currency. | |
|
B) |
In the spot market, currencies are traded for immediate delivery but in the forward market, contracts are made to buy and sell currencies for future delivery. | |
|
C) |
A foreign currency is at a forward discount if the forward rate expressed in domestic currency is below the spot rate, whereas a forward premium exists if the forward rate is above the spot rate. | |
Foreign exchange quotations can be expressed on a direct basis — the home currency price of another currency—or an indirect basis—the foreign currency price of the home currency.
作者: 土豆妮 时间: 2010-4-13 15:28
The direct quote method is:
作者: 土豆妮 时间: 2010-4-13 15:28
The direct quote method is:
Direct quotes are the usual method of quoting currencies. Indirect quotes are used in the U.K., Canada, and U.S.
作者: 土豆妮 时间: 2010-4-13 15:28
If the indirect quote for U.S. dollars in Sydney is 0.7927, what is the equivalent indirect quote in New York City for Australian dollars?
作者: 土豆妮 时间: 2010-4-13 15:29
If the indirect quote for U.S. dollars in Sydney is 0.7927, what is the equivalent indirect quote in New York City for Australian dollars?
Indirect quotes are foreign currency per domestic currency or FC/DC. An indirect quote in Sydney for USD of 0.7927 means 0.7927USD/AUD which equals an indirect quote in New York City of 1AUD/0.7927USD = 1.26AUD/USD.
作者: 土豆妮 时间: 2010-4-13 15:29
An indirect quote for pesos to a $U.S. investor is 8.00-8.50. If you have $100, how many pesos will you be able to buy?
作者: 土豆妮 时间: 2010-4-13 15:29
An indirect quote for pesos to a $U.S. investor is 8.00-8.50. If you have $100, how many pesos will you be able to buy?
Use the following steps to calculate this result:
Step 1: Put the quote in direct terms. (Remember: The bid will become the ask and the ask will become the bid).
Bid: 1.00000 / 8.50000peso/$ = 0.11765$/peso
Ask: 1.00000 / 8.00000peso/$ = 0.12500$/peso
Step 2: Calculate how many pesos can be purchased for $100.00
Since we are buying pesos, we have to buy at the ask price of 0.12500$/peso. 100.00000$ / 0.12500$/peso = 800pesos.
Alternate method:
For the examination, remember that the bank must make its profit through the bid-ask spread (the foreign-exchange market is typically transaction-fee free), so you will always buy at the "high" price and sell at the "low price." Here, the "high" price is 8.00000peso/$ (At 8.00000peso/$ the peso is worth more than at 8.50000peso/$).
100.00000$ × 8.00000peso/$ = 800.00000peso
作者: 土豆妮 时间: 2010-4-13 15:29
$0.555/GBP is:
|
A) |
a direct quote in Great Britain. | |
|
B) |
an indirect quote in Great Britain. | |
|
C) |
an indirect quote in the U.S. | |
作者: 土豆妮 时间: 2010-4-13 15:29
$0.555/GBP is:
|
A) |
a direct quote in Great Britain. | |
|
B) |
an indirect quote in Great Britain. | |
|
C) |
an indirect quote in the U.S. | |
In country X, an indirect quote is foreign currency over domestic currency, or FC/DCX. The quote 0.55500$/GBP is FC/DC (or indirect) to an investor in Great Britain and DC/FC (or direct) to an investor in the United States.
作者: 土豆妮 时间: 2010-4-13 15:30
If the bid is $1.8709/GBP and the ask is $1.8841/GBP, what is the bid?ask spread in GBP/USD?
作者: 土豆妮 时间: 2010-4-13 15:30
If the bid is $1.8709/GBP and the ask is $1.8841/GBP, what is the bid?ask spread in GBP/USD?
The bid-ask spread in European terms is foreign currency per dollar (FC/$) so you are being asked to convert the bid?ask spread to GBP/$. To convert to GBP/$ just take the reciprocal of each number and reverse the bid?ask spread.
1 / ($1.8709/GBP) = 0.5345 GBP/$ and 1 / ($1.8841/GBP) = 0.53076 GBP/$. The bid?ask spread is now 0.5308 ? 0.5345.
作者: luqian55 时间: 2010-5-31 00:10
thanks
作者: annyyu 时间: 2011-1-11 05:43
re
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