Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency. The indirect exchange rates for British pound and the Canadian dollar.

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Answer 1

Question

Chapter 11, Problem 11.1E

a.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The indirect exchange rates for British pound and the Canadian dollar.

b.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The pounds which a British company will pay to purchase goods costing $8000 from U.S company.

c.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The U.S dollars to be paid for a purchase of 4000 Canadian dollars.

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2. Foreign exchange rate quotations Aa Aa An exchange rate is the price of one country's currency expressed in another country's currency. Suppose an American investor is given the current exchange rates in the following table. The listed quotations are quotations stated in American terms. Exchange Rate British pound (£) $1.9760 / pound Euro (€ ) $1.4770 / euro Australian dollar (AU$) $0.9240 / Australian dollar Given these rates, an Australian dollar can purchase British pounds. Purple Whale Foodstuffs Inc. is a U.S.-based firm that produces stereos in Germany at a cost of € 124 (including production and transportation costs) and sells them in England for £ 102. Based on the exchange rate table given in the preceding question, what is Purple Whale Foodstuffs Inc.'s dollar profit for each unit sold? $20.24 $18.40 $19.32 $16.56

Suppose an American investor is given the current exchange rates in the following table. The listed quotations are American terms. British pound (E) Euro (C) Australian dollar (AU$) Given these rates, an Australian dollar can purchase $8.95 Exchange Rate $1.9760 / pound $1.5110/euro O $6.92 O $6.51 $0.9240/ Australian dollar $8.14 British pounds. indirect Magic Milling Company is a U.S.-based firm that produces stereos in Germany at a cost of € 128 (including production and transportation costs) and sells them in England for £ 102. Based on the exchange rate table given in the preceding question, what is Magic Milling Company's dollar profit for each unit sold? direct quotations stated in

1. Assume that you can buy 250 Canadian dollars with 100 British pounds and you have 100 British pounds. The following exchange rates are available.Country U.S. $ Equivalent Currency per U.S. $Canada ? 1.3500U.K 1.8305 ? Complete the table above and compute how much profit, if at all, you can earn with triangle arbitrage? b) Assume the current spot rate is C$1.2103 and the one-year forward rate is C$1.1925. The nominal risk-free rate in Canada is 3 percent while it is 4 percent in the U.S. At what Canadian interest rate, there will be no possibility forprofitable arbitrage?

Answer 2

Question

Chapter 11, Problem 11.1E

a.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The indirect exchange rates for British pound and the Canadian dollar.

b.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The pounds which a British company will pay to purchase goods costing $8000 from U.S company.

c.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The U.S dollars to be paid for a purchase of 4000 Canadian dollars.

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Answer 3

Question

Chapter 11, Problem 11.1E

a.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The indirect exchange rates for British pound and the Canadian dollar.

b.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The pounds which a British company will pay to purchase goods costing $8000 from U.S company.

c.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The U.S dollars to be paid for a purchase of 4000 Canadian dollars.

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Answer 4

Question

Chapter 11, Problem 11.1E

a.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The indirect exchange rates for British pound and the Canadian dollar.

b.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The pounds which a British company will pay to purchase goods costing $8000 from U.S company.

c.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The U.S dollars to be paid for a purchase of 4000 Canadian dollars.

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Answer 5

Chapter 11, Problem 11.1E

a.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The indirect exchange rates for British pound and the Canadian dollar.

b.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The pounds which a British company will pay to purchase goods costing $8000 from U.S company.

c.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The U.S dollars to be paid for a purchase of 4000 Canadian dollars.

Answer 6

Chapter 11, Problem 11.1E

a.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The indirect exchange rates for British pound and the Canadian dollar.

Answer 7

Chapter 11, Problem 11.1E

a.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The indirect exchange rates for British pound and the Canadian dollar.

Answer 8

b.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The pounds which a British company will pay to purchase goods costing $8000 from U.S company.

Answer 9

b.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The pounds which a British company will pay to purchase goods costing $8000 from U.S company.

Answer 10

c.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The U.S dollars to be paid for a purchase of 4000 Canadian dollars.

Answer 11

c.

To determine

Introduction: Foreign exchange rate is the rate at which currency of one country is changed to currency of another country is called foreign exchange rate. Mainly there are two rate, i.e. direct exchange rate and indirect exchange rate.Direct exchange rate is the rate at which price of a unit of the foreign currency is expressed in the unit of local currency.Indirect exchange rate is the rate at which price of a unit of the local currency is expressed in the unit of foreign currency.

The U.S dollars to be paid for a purchase of 4000 Canadian dollars.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 11 - Prob. 11.1Q Ch. 11 - Prob. 11.2Q Ch. 11 - The U.S. dollar strengthened against the European...Ch. 11 - Prob. 11.4Q Ch. 11 - Prob. 11.5Q Ch. 11 - How are assets and liabilities denominated in a...Ch. 11 - Prob. 11.7Q Ch. 11 - Prob. 11.8Q Ch. 11 - Prob. 11.9Q Ch. 11 - Distinguish between an exposed net asset position...

Solution Summary: The author explains that foreign exchange rate is the rate at which currency is changed to currency of another country.

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