User Account

All Pages

Explain the impact change

Assignment Help Finance Basics
Reference no: EM133069861

Malaysia pegs the value of their currency ringgit to the U.S. dollar (fixed Eringgit/dollar). The Central Bank of Malaysia is committed to protect its fixed exchange rate regime and capital mobility, under all circumstances.

Suppose Malaysia experiences a temporary increase in their real GDP due to the increase in tourism revenue with the widely available vaccines bringing an end to the pandemic. Assume all else is constant.

Consider the FX market and the money market diagrams we learned within the asset approach to exchange rate determination and answer the following questions accordingly. Explain when the questions ask you to explain. Do not include graphical illustrations in your submitted answer but feel free to draw them on a paper as they will help you develop your answer

  1. Explain the impact this change would have in the Malaysian money market prior to any interventions by the Central Bank. Which schedule shifts, if any, and why?
  2. Explain how you would expect this change to impact the value of the Eringgit/$, if the Central Bank does not intervene to protect the peg? Which schedule(s) shift, if any, and why?
  3. How should the Central Bank respond to protect the peg and why?

Reference no: EM133069861

Questions Cloud

What is the value of the forward contract : The price of a 6-month European call option of 1 euro purchased at $1.60 is $0.147, and the price of a 6-month European put option of 1 euro sold at $1.60 is $0
Prepare the necessary journal entries to record transactions : The pre-closing credit balance in the allowance for doubtful accounts was $3,100. Prepare the necessary journal entries to record the above transactions
Four sources of funding to an entrepreneur in computing : a) Discuss four sources of funding to an entrepreneur in computing.
Determine the yield on the month security : Assuming the price of a 3 month security is $99.35 and the price of a 6 month security is $98.75, determine the yield on the 3 and 6 month security.
Explain the impact change : Malaysia pegs the value of their currency ringgit to the U.S. dollar (fixed Eringgit/dollar). The Central Bank of Malaysia is committed to protect its fixed exc
What is the cost of goods sold : Purchases for resale during the year were $20,000. Inventory on December 31 is $5,000. What's the cost of goods sold
What is the current stock price : If the stock's required return is 12.51%, and its return on equity (ROE) is 19.00%, then what is the current stock price?
What is the value of currency swap : Green Shoes Cobbs Inc. receives annual GBP payments of 6% on a notional of GBP 15,000 Green Shoes Cobbs Inc. pays annual USD payments of 7% on a notional of USD
Computing basic earnings per share for year ended december : What is the number of shares that should be used in computing basic earnings per share for the year ended December 31, 2016

Reviews

Write a Review

Finance Basics Questions & Answers

  How important are investors expectations of future dividend

Mercier Corporation's stock is selling for $95. It has just paid a dividend of $5 a share. The expected growth rate in dividends is 8 percent.

  Which cpa firm audited the financial statements

Which CPA firm audited the financial statements? What type of opinion was issued? What is Disney's fiscal year? What amount of restructuring costs did Disney expense in 2014? What was the chief cause of these costs?

  Ignore the discounting of cash flows in this part

Using the financial statement effects template, show the financial statement effects, if any, that Firm D would have on October 31, 2010, when it acquires the forward commodity price contract. Show the financial statement effects of recording the cha..

  What is the investments probability index

Your firm is considering an investment that will cost $750,000 today. The investment will produce cash flows of $250,000 in year 1, $300,000 in year 2 through 4, and $100,000 in year 5. The discount rate that your firm uses for projects of this 13..

  What is the npv of project

The risk-free rate is 3.8 percent and the market risk premium is 7 percent. The tax rate is 21 percent. What is the NPV of this project?

  How much cash has the company spent on new long-term assets

How has the mix of assets and liabilities, both short-term and long, changed over the last two years?

  Equivalent annual rate

I have discussion which deals with exercises in determining Equivalent Annual Rate (EAR.) This is closely related to the time value of money and deals with how frequency of compounding of interest rate affects value calculation.

  Mooradian corporations free cash flow during the just-end

mooradian corporations free cash flow during the just-end yeart0 was 180 million and its fcf is expected to grow at a

  Do you think that the dividend is affecting the price of a

what is the risk on different financial assets and what is affecting their risk?how many different bonds and stocks

  Determine the profitability index of project

A project has an initial outlay of $1,171. It has a single payoff at the end of year 5 of $7,062. What is the profitability index (PI) of the project.

  Evaluate proposed launch using standard discounted cash flow

Evaluate the proposed launch using a standard discounted cash flow approach. How should the committee address the issue of which discount rate to use

  Kay corporation 5-year bonds yield 620 and 5-year t-bond

kay corporation 5-year bonds yield 6.20 and 5-year t-bond yield 4.40. the real risk rate is r2.5 the inflation premium

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd