Depending on whether a small European country faces a surplus or a budget deficit, the sales tax is adjusted: taxes are rased when deficit is observed,and cut when there is a surplus observed.Presented graph shows historical sales tax since 1933. T(x) (in cents) represent the sales tax per euro (latest name of their currency) spent in year x.Note that '09 represents 2009.Find correct answers to the following:a. lim T(x)x-51c. lim T(x)x-49*e. T(49)b. lim T(x)x-49d. lim T(x)X-49f. Was 1973 a year ofdeficit or surplasSelect the choices that the best represents your observations. Fill in the answer box within your choice, if applicable.OA. lim T(x)= centsb.x-51(Round to one decimal place as needed.)B. The limit does not exist.OA. lim T(x)= ☐ centsx-49(Round to one decimal place as needed.)B. The limit does not exist.Tix)8'900235'43'49+'67 74'01 '09 x'89'911933Year C.A.lim T(x)=centsd.X-49*(Round to one decimal place as needed.)B. The limit does not exist.A. lim T(x)= centsx-49(Round to one decimal place as needed.)B. The limit does not exist.e. T(49)=cents

Step 1: Step 2: Step 3: Step 4:

Answered: Depending on whether a small European…

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter7: International Arbitrage And Interest Rate Parity

Section: Chapter Questions

Problem 18QA

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Suppose it is January 1, 1994, and the Deutsche mark revalues from $0.31 at the beginning of the year to $0.35 at the end of the year. Inflation during the year is 5.2% in the U.S. and 3.5% in Germany. What is the real devaluation (-) or real revaluation (+) of the Deutsche mark during the year? a . 9.10% b . 11.02% c . - 7.30% d . - 2.60%
Please answer part c questions. Part a and b has been answered.
A country in Southeast Asia states it's gross domestic product in terms of yen. Last year it's GDP was 50 billion yen when one U.S. dollar could be exchanged into 120 yen. Required : a. Determine the country's GDP in terms of U.S. dollars for last year.
(a) Suppose that the current exchange rate between the U.S. dollar ($) and the pound sterling (£) is Se/$=0.75 (i.e. $1 = £0.75). The basket of goods and services consumed by a typical household cost £200 in the UK and $300 in the U.S. A one-year U.S. Treasury bill yields an annual rate of retum of 3%, while a comparable UK Treasury bill yields 5%. The Federal Reserve is expected to keep the U.S. inflation rate at 2% over the coming year, while the Bank of England is expected to keep the UK inflation rate at 3% over the same period. (1) Is the pound overvalued or undervalued relative to the dollar by the standard of absolute purchasing power parity?
Suppose you observe the following quotes between the euro and the Mexican peso (Mex$): 1/1/14: Mex$20/€ 1/1/15: €.08/Mex$ Find the percentage change in the value of the euro from the Mexican point of view. Round intermediate steps and your final answer to four decimals. .375 -60 -375 .60 none of the above
If the U.S. Treasury deposits income tax receipts into its account at the Federal Reserve, then a. the money multiplier will decrease b. the money multiplier will increase c. the monetary base will decrease d. the monetary base will increase Expected inflation can be estimated as a. the return on a TIPS bond b. the return on a Treasury bond c. the return on a TIPS bond minus the return on a Treasury bond d. the return on a Treasury bond minus the return on a TIPS bond A decrease in the expected return on stocks will a. shift the demand curve for bonds leftwards b. shift the demand curve for bonds rightwards c. shift the supply curve for bonds leftwards d. shift the supply curve for bonds rightwards Which of the following is part of M2? a. Small time deposits b. Money market mutual funds c. Currency held by foreigners d. All of the above
a) Assume the following information: 180‑day U.S. interest rate = 8% 180‑day British interest rate = 9% 180‑day forward rate of British pound = $1.50 Spot rate of British pound = $1.48 Assume that a U.S. exporter will receive 400,000 pounds in 180 days. Would it be better off using a forward hedge or a money market hedge? Substantiate your answer with estimated revenue for each type of hedge. b) As treasurer of a U.S. exporter to Canada, you must decide how to hedge (if at all) future receivables of 250,000 Canadian dollars 90 days from now. Put options are available for a premium of $.03 per unit and an exercise price of $.80 per Canadian dollar (CA$). The forecasted spot rate of the CA$ in 90 days follows: Future Spot Rate Probability (%) $.75 50…
If inflation rate in Canada is 5%, while the inflation rate in the U.S. is 3%. According to PPP, the Canadian dollar should ____ by ____%. A. Depreciate; 4.85 B. Depreciate; 1.90% C. Appreciate; 1.94 D. Appreciate 4.85%
24) In 1999, the euro was trading at $0.84 per euro. If the euro is now trading at $0.99 per euro, what is the percentage change in the euro’s value?
1. Based on the following information, answer the problems showing procedure for each problem. CURRENCY SPOT & FORWARD RATES TABLE_1 U.S./Can. $1 U.S. $1 Cdn Cdn.$ U.S. $ in in Country per unit per unit Cdn.$= U.S.$= 1.5833 0.6316 SPOT 1 month forward 1.5847 2 months forward 1.5861 3months forward 1.5879 6months forward 1.5932 12months forward 1.6041 3years forward 1.6328 5years forward 1.6538| 7years forward 1.6738 10years forward 1.7133 Britain 1 m forward 2 m forward 3 m forward 6 m forward 12 m forward Europe 1 m forward 3 m forward 6 m forward 12 m forward Japan (pound) 2.4582 2.4559 2.454 2.4525 2.4474 2.4392 1.5504 1.5497 1.549 1.5489 1.5506 (Yen) 0.013034 0.008232 1 m forward 0.013066 0.008245 1.5526 1.5498 1.5472 1.5445 1.5362 1.5206 0.9792 0.9779 0.9755 0.9722 0.9666 0.631 0.6305 0.6298 0.6277 0.6234 0.6124 0.6047 0.5974 0.5837 (euro) Cdn.$ in 2001: High 1.5028 Low 1.6183 Average 1.5701 0.6654 0.6179 0.6369 3 m forward 0.013131 0.00827 6 m forward 0.013231 0.008305 12 m…
Some of the websites show graphs indicating how one currency has done relative to another currency. a. Over the past year, how has the pound performed against the dollar? Does the dollar buy more or less pounds today than it did 1 year ago? b. Over the past year, how has the dollar performed against the yen? Does the dollar buy more or less yen today than it did 1 year ago?
A3)

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