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74. Convert each of the following indirect quotes to dollar direct quotes:
• $1 = 805 Vietnam dong
• $1 = 2,349.6 Venezuelan bolivar
• $1 = 7.0523 South African rand
$1 equals:
75. Convert each of the following indirect quotes to dollar direct quotes:
• $1 = 3.05 Saudi Arabian riyal
• $1 = 41.45 Philippine peso
• $1 = 0.52 Latvian lat
$1 equals:
76. Convert each of the following indirect quotes to dollar direct quotes:
• $1 = 3.95 Saudi Arabian riyal
• $1 = 41.45 Philippine peso
• $1 = 0.58 Latvian lat
$1 equals:
77. Compute the amount of each foreign currency that can be purchased for $5,000:
a. 1 Danish krone = $0.18
b. 1 Indian rupee = $0.15
c. 1 Israeli shekel = $0.37
$5,000 equals:
78. Compute the number of dollars that can be bought with 2 million of each foreign currency
units:
• $1 = 19,005 Vietnam dong
• $1 = 2,949.6 Venezuelan bolivar
• $1 = 7.9523 South African rand
79. Compute the number of dollars that can be bought with 1 million of each foreign currency
units:
• $1 = 3.9 Saudi Arabian riyal
• $1 = 0.52 Philippine peso
• $1 = 0.75 Latvian lat
80. If the price of silver in England is £6.25 per ounce, what is the expected price of silver in
the United States if the spot exchange rate is $1 = £0.55?
81. If the price of copper in Europe is €2.72 per ounce, what is the expected price of copper
in the United States if the spot exchange rate is $1 = €0.8623?
82. A financial manager has determined that the appropriate discount rate for a foreign
project is 17 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 3 percent and 8 percent,
respectively.
83. Given these two exchange rates, $1 = 12.5 Mexican peso and $1 = €0.75, compute the
cross-rate between the Mexican peso and the euro. State this exchange rate in pesos.
84. Given these two exchange rates, $1 = 1.32 Australian dollars and $1 = £0.56, compute
the cross-rate between the Australian dollar and the pound. State this exchange rate in
Australian dollars and in pounds.
85. The Russian financial crisis of 1998 caused Russia's currency to be dramatically
devalued. What is the percentage change in value of a $100 million investment in Russia when
the exchange rate changes from $1 = 6 rubles to $1 = 25 rubles?
86. The spot rate between the U.S. dollar and the New Zealand dollar is $1 = NZD1.6607. If
the interest rate in the United States is 6 percent and in New Zealand is 4 percent, then what
should be the three-month forward exchange rate?
87. The current spot rate between the U.S. dollar and the Swedish krona is $1 = 7.5500
krona. If the inflation rate in the United States is 4 percent and in Sweden is 1 percent, then what
is the expected spot rate in one year?
88. A U.S. firm is expecting cash flows of 20 million Mexican pesos and 35 million Indian
rupees. The current spot exchange rates are: $1 = 11.792 pesos and $1 = 49.204 rupees. If these
cash flows are not received for one year and the expected spot rates at that time will be $1 =
11.118 pesos and $1 = 41.075 rupees, then what is the difference in dollars received that was
caused by the delay?
89. A U.S. firm is expecting to pay cash flows of 15 million Egyptian pounds and 25 million
Qatar rials. The current spot exchange rates are: $1 = 5.25 pounds and $1 = 3.75 rials. If these
cash flows are delayed one year and the expected spot rates at that time will be $1 = 5.62
pounds and $1 = 4.00 rials, then what is the difference in dollars paid that was caused by the
delay?
90. The U.S. dollar spot exchange rate with the Canadian dollar is $1 = CA$1.12. The U.S.
dollar and Swiss franc exchange rate is $1 = 1.275. If the cross-rate between the franc and
Canadian dollar is 1 franc = CA$0.9750, which of the following statements is correct?
19-78
91. An exchange rate regime where the country's central bank allows its currency price to
float freely between an upper and lower bound and may buy or sell large amounts of it in order to
provide price support or resistance is referred to as:
92. All of the following are political risks to the assets and cash flows of multinational
corporations EXCEPT:
93. All of the following are ways that a multinational corporation can minimize the impact of
political risk EXCEPT:
94. The concept of interest parity describes:
95. If gold is selling in the U.S. for $1,015 per ounce and if 1 peso = $0.35, then gold should
sell for _________ in Mexico.
96. If the law of one price does not hold, then:
