What will the exchange rate be next year

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Reference no: EM133765655

Assignment: Business

I. Your friend from Germany has decided to come and visit you in the U.S. You estimate the cost of her trip at $3,520. What is the cost to her in euros if the U.S. dollar equivalent of the euro is 1.393?

II. Your friend from France has decided to come and visit you in the U.S. You estimate the cost of her trip at $4,438. What is the cost to her in euros if the U.S. dollar equivalent of the euro is 0.685?

III. Given

USD/Brazilian Real = 3.774
USD/Australian Dollar = 1.276
USD/Chinese Yuan = 5.578

What is the Brazilian Real/Chinese Yuan cross rate?

IV. Given

USD/Brazilian Real = 3.949
USD/Australian Dollar = 1.5
USD/Chinese Yuan = 5.817

What is the Australian Dollar/Chinese Yuan cross rate?

V. Suppose you have the following information:

1 USD = 0.958 GBP
1 USD = 1.117 CAD

What is the GBP/CAD cross rate?

VI. In New York, you can exchange $1 for €0.8214 or £0.6282. Suppose that, in Berlin, £1 costs €1.2643. How much profit can you earn on $10,501 using triangle arbitrage?

VII. Assume the current spot rate between the UK and the U.S. is £0.856 per $1, the expected inflation rate in the U.S. is 2.67 percent, and the expected inflation rate in the UK is 3.78 percent. If relative purchasing power parity exists, what will the exchange rate be next year?

VIII. Assume the current spot rate between the UK and the U.S. is £0.652 per $1, the expected inflation rate in the U.S. is 2.49 percent, and the expected inflation rate in the UK is 3.93 percent. If relative purchasing power parity exists, what will the exchange rate be 2 years from now?

Reference no: EM133765655

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