What is the spot rate for the British pound (GBP) on Wednesday in terms of the U.S. dollar (USD)?
Global Skills: Foreign Currency
Details: Instructions
Use the textbook and any other source, as long as you cite it. You must use live relevant data from this past week for the answers to 1, 2, and 4.
1. What is the spot rate for the British pound (GBP) on Wednesday in terms of the U.S. dollar (USD)? Or, from the U.S. perspective, what is the direct quote on pounds?)
2. What is the spot price for the USD on Wednesday in terms of the Swiss franc (CHF)? (Or, from the U.S. perspective, what is the indirect rate on Swiss francs?)
3. Using your answers from #1 and #2 above, calculate the cross rate of exchange between the British pound (GBP) and the Swiss franc (CHF) (need to see your math).
4. Calculate the annualized forward premium or discount on six-month forward yen (need to see your math).
5. Based on your answer to #4 above, if you are planning to go to Japan in 6 months, should you buy your yen today? Why or why not?
6. According to the international Fisher Effect, if the real interest rate is 4%, if the US inflation rate is 5% and the Japanese inflation rate is 7%, then what is the nominal interest rate in the US? What is the nominal interest rate in Japan? Need to see the math.
7. What is the expected difference between interest rates in the United States and Japan (do not need to see math, this can be answered in words and not numbers)
8. Did the value of the Canadian dollar (CAD) rise or fall between Tuesday and Wednesday (hint – do not always view currency from a US perspective)?
9. What are the 2 currencies used in Cuba (you will need to do some external research)? Why are there 2 currencies?
10. What are some of the main reasons not all countries in the EU have adopted the Euro (you will need to do some external research)?
The book being used– International Business (16th Edition) Environments & Operations
by John Daniels, Lee Radebaugh, Daniel Sullivan
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