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How many pesos will the franc buy

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Reference no: EM132638652

Shown below are exchange rates for several currencies.

                                     US$ per 1 euro         US$ per 1 franc               Mexican peso per US$1

Spot rate                         1.21                         1.03                                 19.68

30-day forward rate           1.19                           1.06                              20.15

60-day forward rate             1.15                           1.07                               21.28

Question a. Is the euro appreciating or depreciating against the U.S. dollar? Explain.

Question b. Is the Swiss franc appreciating or depreciating against the U.S. dollar? Why?

Question c. Is the Mexican peso appreciating or depreciating against the U.S. dollar? Why?

Question d. Using cross-rates, based on the spot rate, how many francs will the euro buy, how many pesos will the franc buy, and how many euro will the peso buy?

Question e. A U.S. company purchases goods from several foreign companies with payment due in euros, francs, and pesos. Would the company be better off paying any of the suppliers now or should it wait 60 days? Why?

Reference no: EM132638652

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