38.
Currency Exchange Compute the amount of foreign currency that can be purchased for
$400,000:
1 Indian rupee = $0.02250
39.
Currency Exchange Compute the amount of foreign currency that can be purchased for
$750,000:
1 Israeli shekel = $0.2351
40.
Currency Exchange Compute the amount of foreign currency that can be purchased for
$600,000:
1 Korean won = $0.001045
41.
Currency Exchange Compute the amount of foreign currency that can be purchased for
$1,000,000:
1 Malaysian ringget = $0.2875
42.
Currency Exchange Compute the amount of foreign currency that can be purchased for
$1,300,000:
1 Thai baht = $0.03057
43.
Currency Exchange Compute the number of dollars that can be bought with 2 million of
foreign currency units:
$1 = 15,990 Vietnam dong
44.
Currency Exchange Compute the number of dollars that can be bought with 5 million of
foreign currency units:
$1 = 2,150.4 Venezuelan bolivar
45.
Currency Exchange Compute the number of dollars that can be bought with 8 million of
foreign currency units:
$1 = 7.2501 South African rand
46.
Currency Exchange Compute the number of dollars that can be bought with 1 million of
foreign currency units:
$1 = 3.8249 Saudi Arabian riyal
47.
Currency Exchange Compute the number of dollars that can be bought with 2 million of
foreign currency units:
$1 = 48.210 Philippine peso
48.
Currency Exchange Compute the number of dollars that can be bought with 1.5 million of
foreign currency units:
$1 = 0.5467 Latvian lat
49.
Law of One Price If the price of silver in England is £7.10 per ounce, what is the expected
price of silver in the United States if the spot exchange rate is $1 = £0.5275?
50.
Law of One Price If the price of silver in England is £6.85 per ounce, what is the expected
price of silver in the United States if the spot exchange rate is $1 = £0.5426?
51.
Law of One Price If the price of copper in Europe is €2.22 per ounce, what is the expected
price of copper in the United States if the spot exchange rate is $1 = €0.7802?
52.
Discount Rates A financial manager has determined that the appropriate discount rate for
a foreign project is 15 percent. However, that discount rate applies in the United States
using dollars. What discount rate should be used in the foreign country using the foreign
currency? The inflation rate in the United States and in the foreign country is expected to
be 5 percent and 7 percent, respectively.
53.
Discount Rates A financial manager has determined that the appropriate discount rate for
a foreign project is 16 percent. However, that discount rate applies in the United States
using dollars. What discount rate should be used in the foreign country using the foreign
currency? The inflation rate in the United States and in the foreign country is expected to
be 4 percent and 8 percent, respectively.
54.
Discount Rates A financial manager has determined that the appropriate discount rate for
a foreign project is 15 percent. However, that discount rate applies in the United States
using dollars. What discount rate should be used in the foreign country using the foreign
currency? The inflation rate in the United States and in the foreign country is expected to
be 8 percent and 4 percent, respectively.
55.
Cross Rate Given these two exchange rates, $1 = 11.25 Mexican peso and $1 = €0.7521,
compute the cross rate between the Mexican peso and the euro. State this exchange rate
in pesos and in euros.
56.
Cross Rate Given these two exchange rates, $1 = 1.3254 Australian dollars and $1 =
£0.5233, compute the cross rate between the Australian dollars and the pound. State this
exchange rate in Australian dollars and in pounds.
57.
Exchange Rate Risk In the late 1990s, many East Asian currencies suddenly and
dramatically devalued. What is the percentage change in value of a $10 million investment
in Indonesia when the exchange rate changes from $1 = 3,000 rupiah to $1 = 10,000
rupiah?
58.
Exchange Rate Risk In the late 1990s, many East Asian currencies suddenly and
dramatically devalued. What is the percentage change in value of a $75 million investment
in Indonesia when the exchange rate changes from $1 = 1,000 rupiah to $1 = 7,000
rupiah?
59.
Exchange Rate Risk What is the percentage change in value of a $50 million investment
in Russia when the exchange rate changes from $1 = 7 rubles to $1 = 12 rubles?
60.
Interest Rate Parity If the spot rate between the U.S. dollar and the New Zealand dollar is
$1 = NZD1.5215, and if the interest rate in the United States is 8 percent and in New
Zealand is 4 percent, then what should be the three-month forward exchange rate?
61.
Interest Rate Parity Assume the spot rate between the U.S. dollar and the Taiwan dollar
is $1 = TWD32.456. If the interest rate in the United States is 4 percent and in Taiwan is 3
percent, then what should be the one-month forward exchange rate?
62.
Purchasing Power Parity If the current spot rate between the U.S. dollar and the Swedish
krona was $1 = 7.5423 krona, and if the inflation rate in the United States was 5 percent
and in Sweden it was 2 percent, then what would be the expected spot rate in one year?
63.
Purchasing Power Parity If the current spot rate between the U.S. dollar and the
Netherland Antilles guilder was $1 = 1.68 guilder, and if the inflation rate in the United
States was 1 percent and in the Netherland Antilles it was 6 percent, then what would be
the expected spot rate in one year?