Q3. Home’s currency, the peso, currently trades at an exchange rate of 1 peso per dollar. Home has external assets of 320 billion pesos, 100% of which are denominated in dollars. It has external liabilities of 800 billion pesos, 90% of which are denominated in dollars.Is Home a net creditor or debtor? What is Home’s external wealth measured in pesos?What is Home’s net position in dollar-denominated assets, measured in pesos? And whatis it measured in US dollars?If the pesos depreciate to 1.2 pesos per dollar, what is the change in Home’s externalwealth in pesos?

1. Net creditor/debtor position:- External assets: 320B pesos- External liabilities: 800B pesos- Net…

Answered: Q3. Home’s currency, the peso,…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter6: Managing In The Global Economy

Section: Chapter Questions

Problem 6E

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Q3. Home’s currency, the peso, currently trades at an exchange rate of 1 peso per dollar. Home has external assets of 320 billion pesos, 100% of which are denominated in dollars. It has external liabilities of 800 billion pesos, 90% of which are denominated in dollars.

Is Home a net creditor or debtor? What is Home’s external wealth measured in pesos?
What is Home’s net position in dollar-denominated assets, measured in pesos? And what

is it measured in US dollars?
If the pesos depreciate to 1.2 pesos per dollar, what is the change in Home’s external

wealth in pesos?

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