Analyze the portfolio balance view

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Reference no: EM133119972

Instruction:

Question 1: The ER is real/$ .10, or $10 buys 1 real. The change in the ER is what percentage wise, if at the end of the year the ER is r/$ .011111111, or $ 90 buy real 1? Show it in two ways. The one is real per dollars and the other is dollars per real.Explain.

Question 2: The Nigerian naira versus the US dollar is 7 to 1, i.e., 7 naira buy one dollar. The ER between the Swiss franc and the US dollar is one Swiss franc to 1.1 US $. Finally, the naira trades 7.02 per one Swiss franc. What kind of triangular arbitrage will induce the highest profit for you? Assume you start with $1 million, or the equivalent of it in the other currencies. (Note we are asking for the highest profit and not any profit.)Explain.

Question 3: Expound on the current account view of exchange rate determination.

Question 4: Analyze the portfolio balance view.

Question 5: Explicate the monetary approach to exchange rate determination.

Question 6: Compare and contrast the efficiency, technical and fundamental theories of exchange rates.

Question 7: a-Who are the biggest investors in foreign exchange markets? Elucidate.
b-Which are the biggest trading locations in the world?
c-What are the top currencies in international trade?

Question 8: Discuss the J effect in the context of a country devaluing its currency.

Reference no: EM133119972

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