Applied Macro and International Economics. Alberto Cavallo. February 2011
|
|
|
- Jared Casey
- 10 years ago
- Views:
Transcription
1 Exchange Rt Rates Applied Macro and International Economics Alberto Cavallo February 2011
2 Class Outline Nominal exchange rates E Short run: market for local currency Interest rate parity Long run: Law of one price and PPP Real Exchange rates E and Prices
3 Nominal Exchange Rate Exchange Rate key price in open economies effect on trade and financial flows Nominal Ex. Rate = E = price of one currency in terms of another Two ways of expressing it: Local currency per unit of foreign currency. Eg Brazil: $5 reals per dollar ( E deprecia on of local currency) MORE INTUITIVE: Foreign currency per unit of local currency. Eg Brazil: 02d 0.2 dollars per real ( E is apprecia on of local l currency) From now on, I will use the intuitive form
4 Reals per 1USD Last year. Is the Real appreciating /depreciating? Less Reals to buy dollar.. Dollars per 1 Real Real is appreciating More dollars to buy real.. Yahoo.com. All rights reserved. This content is excluded from our Creative Commons license. For more information, see
5 Euros per 1USD Last 5 days. Is the Euro appreciating /depreciating? Less Euros to buy dollar.. Dollars per 1EUR Euro is appreciating More dollars to buy euro.. Yahoo.com. All rights reserved. This content is excluded from our Creative Commons license. For more information, see
6 Market for Local Currency The price is E (foreign currency per unit of local currrency) E means local currency is more valuable (appreciates) What affects E? Exports & Imports Financial Flows
7 Market for Local Currency Example: Brazil Imports need to buy dollars to purchase goods abroad supply reals Exports bring dollars from abroad, need to exchange them for reals demand reals Capital Outflows (away from brazil) supply reals Capital Inflow (coming to brazil) demand reals
8 Short run: run: Currency Market Market for Reals (local currency) E(US$/reals) or Value of Real Net Capital Outflow (i US,i BR, Expectations) + Appreciation Depreciation Net Export (E, taste, trade policy) Current Account
9 What affects the nominal E? Exports are more desirable NX E appreciation Market tf for Reals (local l currency) E(US$/reals) or Value of Real Net Capital Outflow (i US,i BR, Expectations) Appreciation Depreciation Net Exports Net Exports Current Account
10 What affects the nominal E? If interest rates go down capital outflows E depreciation If investors leave in panic capital outflows E depreciation Market for Reals (local currency) E(US$/reals) or Value of Real Net Capital Outflow Net Capital Outflow Appreci ation Depreci ation Net Export (E, taste, trade policy) Current Account
11 Short run run In the short run run mostly about financial transactions capital outflows and inflows Depend on interest rates + current and Depend on interest rates + current and expected exchange rates
12 Interest Rate Parity 1+iUS USA 1 US$ (1/Et) * (1+iBR )*Et+1 Change back C Currency att t+1 (Et+1 ) Change currency B BRAZIL 1+iUS 1+iBR (1/Et) reals (1/Et) * (1+iBR ) Note: E is dollars per real, so 1/E is reals per dollar 1+iUS = (1/Et) * (1+iBR )*Et+1 Invest in US 1+iUS Invest in BRAZIL If ius, ibr or expect apprecia on or real (Et+1/Et) < (1+iBR )*(Et+1/Et) more capital flows to Brazil ( example of carry trade )
13 Long Run Theories Purchasing Power Parity (PPP) Based on Law of one price same good should sell for the same amount (expressed in same currency) in two countries Otherwise arbitrage opportunity P US = P BR. E (US$/Real) Cost US (dollars) Cost in Brazil (dollars)
14 PPP If PPP holds, in the long run: E(US$/Real) = P US /P /P BR Intui on: If P US /P BR US is expensive, Brazil cheap buy goods in brazil, sell in US demand for real goes up (think exports) E(US$/Real)
15 Does PPP hold in the data? Big Mac Index US vs UK US$3.73 = 2.29*1.61(dollars/pound)=US$3.61 Us vs Norway US$3.73 = K45* 0.175(dollars/kroner)= US$7.87 i di li f S Find it online..for US and UK Ipod classic 160gb Apple TV Top selling MP3 Song in Amazon
16 PPP fails because Non tradable goods Transport Costs Taxes Items not identical to consumers Market conditions (taste, competitors) Pricing to market
17 Long Run Theories PPP use as an approximation Another long run theory: BB NN not in this class. Roberto teaches it in next year
18 Real Exchange Rate Exports and Imports are affected by E and the price level in each country E. P BR BR (US$/real) Real E P US If E or P BR or P US real depreciation brazil relatively cheaper exports more
19 Depreciation as a policy tool In the short run run > P BR fixed Expansionary Monetary Policy M i E real depreciation more exports In long run inflation P BR real appreciation i So? more printing, nominal depreciation, inflation again can spiral out of control
20 Remember E is determined. Short run: capital flows currency market Long run: PPP Real E matters for trade E and Prices
21 MIT OpenCourseWare Applied Macro- and International Economics Spring 2011 For information about citing these materials or our Terms of Use, visit:
If the nominal exchange rate goes from 100 to 120 yen per dollar, the dollar has appreciated because a dollar now buys more yen.
SOLUTIONS TO TEXT PROBLEMS: Quick Quizzes 1. Net exports are the value of a nation s exports minus the value of its imports, also called the trade balance. Net capital outflow is the purchase of foreign
What Determines Exchange Rates? In the Short Run In the Long Run
What Determines Exchange Rates? In the Short Run In the Long Run Selected Exchange Rates Selected Exchange Rates Determinants of the Exchange Rate in the Short Run In the short run, movements of currency
Thank You for Attention
Thank You for Attention Explain how the foreign exchange market works. Examine the forces that determine exchange rates. Consider whether it is possible to predict future rates movements. Map the business
What you will learn: UNIT 3. Traditional Flow Model. Determinants of the Exchange Rate
What you will learn: UNIT 3 Determinants of the Exchange Rate (1) Theories of how inflation, economic growth and interest rates affect the exchange rate (2) How trade patterns affect the exchange rate
Part A: Use the income identities to find what U.S. private business investment, I, was in 2004. Show your work.
Exercise 1 Due: Preliminary figures (in billions of dollars) for 2004 taken from the 2005 Economic Report of the President showed that: Y = 11,728.0, C = 8,231.1, EX = 1,170.2, IM = 1,779.6, G = 2,183.8
Agenda. Exchange Rates, Business Cycles, and Macroeconomic Policy in the Open Economy, Part 1. Exchange Rates. Exchange Rates.
Agenda, Business Cycles, and Macroeconomic Policy in the Open Economy, Part 1 How Are Determined A Supply-and-Demand Analysis 19-1 19-2 Nominal exchange rates: The nominal exchange rate indicates how much
FLEXIBLE EXCHANGE RATES
FLEXIBLE EXCHANGE RATES Along with globalization has come a high degree of interdependence. Central to this is a flexible exchange rate system, where exchange rates are determined each business day by
Definitions and terminology
Exchange rates are a confusing concept despite the fact that we have to deal with exchange rates whenever we travel abroad. The handout will tackle the common misconceptions with exchange rates and simplify
Determinants of FX Rates: Chapter 2. Chapter Objectives & Lecture Notes FINA 5500
Determinants of FX Rates: Chapter 2 Chapter Objectives & Lecture Notes FINA 5500 Chapter Objectives: FINA 5500 Chapter 2 / Determinants of Exchange Rates 1. To be able to explain in your own words why
Solutions: Sample Exam 2: FINA 5500
Short Questions / Problems Section: (88 points) Solutions: Sample Exam 2: INA 5500 Q1. (8 points) The following are direct quotes from the spot and forward markets for pounds, yens and francs, for two
How To Calculate The Price Of A Dollar
Exchange Rates Costas Arkolakis teaching fellow: Federico Esposito Economics 407, Yale January 2014 Outline De nitions: Nominal and Real Exchange Rate A Theory of Determination of the Real Exchange Rate
Assignment 10 (Chapter 11)
Assignment 10 (Chapter 11) 1. Which of the following tends to cause the U.S. dollar to appreciate in value? a) An increase in U.S. prices above foreign prices b) Rapid economic growth in foreign countries
Work Example Question 1
Work Example Question 1 1 Question: Assuming one quarter of the revenue generated in 2008 was profit, how much profit did Lucy and Laura make that year? Answers: $13,500 $3,375 $2,250 $1,125 1) Start by
MGE#12 The Balance of Payments
MGE#12 The Balance of Payments The Current Account, the Capital Account and the Balance of Payments Introduction to the Foreign Exchange Market Savings, Investment and the Current Account 1 From last session
FLASH ECONOMICS. Can a central bank keep real interest rates abnormally low over the long term? ECONOMIC RESEARCH. 2 June 2016 No.
ECONOMICS ECONOMIC RESEARCH June 1 No. 53 Can a central bank keep real interest rates abnormally low over the long term? According to the usual theory: - In the short term, an expansionary monetary policy
14.02 PRINCIPLES OF MACROECONOMICS QUIZ 3
14.02 PRINCIPLES OF MACROECONOMICS QUIZ 3 READ INSTRUCTIONS FIRST: Read all questions carefully and completely before beginning the quiz. Label all of your graphs, including axes, clearly; if we can t
The Foreign Exchange Market. Prof. Irina A. Telyukova UBC Economics 345 Fall 2008
The Foreign xchange Market Prof. Irina A. Telyukova UBC conomics 345 Fall 2008 Outline The foreign exchange market is the market where assets denominated in different currencies are traded against each
Oxford University Business Economics Programme
The Open Economy Gavin Cameron Tuesday 10 July 2001 Oxford University Business Economics Programme the exchange rate The nominal exchange rate is simply the price of one currency in terms of another pounds
The Open Economy. Nominal Exchange Rates. Chapter 10. Exchange Rates, Business Cycles, and Macroeconomic Policy in the Open Economy
Chapter 10 Exchange Rates, Business Cycles, and Macroeconomic Policy in the Open Economy Economics 282 University of Alberta The Open Economy Two aspects of the interdependence of the world economies:
Chapter Outline. Chapter 13. Exchange Rates. Exchange Rates
Chapter 13, Business Cycles, and Macroeconomic Policy in the Open Economy Chapter Outline How Are Determined: A Supply-and-Demand Analysis The IS-LM Model for an Open Economy Macroeconomic Policy in an
Businesses are affected by the economy An economy describes how a country spends its money This is determined by 5 factors
Economic Factors Businesses are affected by the economy An economy describes how a country spends its money This is determined by 5 factors Economic Growth Exchange Rates Rates Economic Factors Inflation
Ch. 38 Practice MC 1. In international financial transactions, what are the only two things that individuals and firms can exchange? A.
Ch. 38 Practice MC 1. In international financial transactions, what are the only two things that individuals and firms can exchange? A. Currency and real assets. B. Services and manufactured goods. C.
International Economic Relations
nswers to Problem Set #5 International conomic Relations Prof. Murphy Chapter 5 Krugman and Obstfeld. Relative PPP predicts that inflation differentials are matched by changes in the exchange rate. Under
Lecture 10: Open Economy & Crises
Lecture 10: Open Economy & Crises Today Open Economy Macroeconomics Key Readings Mishkin, Cht 24, Leddin/Walsh Cht 18. Learning Outcomes Theory. Extend ISLM to account for Imports/Exports Practice. Show
Chapter 14 Foreign Exchange Markets and Exchange Rates
Chapter 14 Foreign Exchange Markets and Exchange Rates International transactions have one common element that distinguishes them from domestic transactions: one of the participants must deal in a foreign
Chapter Review and Self-Test Problems
CHAPTER 22 International Corporate Finance 771 3. The fundamental relationships between international financial variables: a. Absolute and relative purchasing power parity, PPP b. Interest rate parity,
Übungen zur Vorlesung Einführung in die Volkswirtschaftslehre VWL 1
Übungen zur Vorlesung Einführung in die Volkswirtschaftslehre VWL 1 Übungen Kapitel 31/38 Beat Spirig Aufgabe 31.4, UK capital outflow NCO = purchases of foreign assets by domestic residents purchases
Homework Assignment #3: Answer Sheet
Econ 434 Professor Ickes Homework Assignment #3: Answer Sheet Fall 2009 This assignment is due on Thursday, December 10, 2009, at the beginning of class (or sooner). 1. Consider the graphical model of
Economics 380: International Economics Fall 2000 Exam #2 100 Points
Economics 380: International Economics Fall 2000 Exam #2 100 Points Name (ID) YOU SHOULD HAVE 7 PAGES FOR THIS EXAM. EXAM WILL END AT 1:50. MAKE SURE YOUR NAME IS ON THE FIRST AND LAST PAGE OF THE EXAM.
An overview of FX Exposure Risk: Assessment and Management
An overview of FX Exposure Risk: Assessment and Management June 2015 1. Introduction This report presents an overview of various types of foreign currency exposure, their impact on the financial statements,
Slides for Krugman and Obstfeld Chapter 13
Slides for Krugman and Obstfeld Chapter 13 Alan G. Isaac American University 2010-09-10 Preview Introduction to Exchange Rates Introductory Concepts International Financial Markets Basics exchange rate
2.5 Monetary policy: Interest rates
2.5 Monetary policy: Interest rates Learning Outcomes Describe the role of central banks as regulators of commercial banks and bankers to governments. Explain that central banks are usually made responsible
Lecture 2. Output, interest rates and exchange rates: the Mundell Fleming model.
Lecture 2. Output, interest rates and exchange rates: the Mundell Fleming model. Carlos Llano (P) & Nuria Gallego (TA) References: these slides have been developed based on the ones provided by Beatriz
MGE #13 Capital mobility and interest rates
MGE #13 Capital mobility and interest rates Loanable funds market and interest rates in the long-run Capital flows and monetary policy, with fixed exchange rates The Mexican crisis of 1994 1 From the last
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Study Questions 6 (Foreign Exchange Markets) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The currency used to buy imported goods is 1) A) the
Capital Markets Memorandum
Capital Markets Memorandum Capital Markets and Asset Allocation insights from Frontier Advisors Frontier s Medium Term Fundamental Currency Model November 014 Alvin Tan is a member of the Capital Markets
Econ 102 The Open Economy
Winter 2007 Econ 102 The Open Economy 1. Be sure to read your copy of the Wall Street Journal every weekday, looking especially for items related to the material in this course. Find an article in this
University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi
University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi CH 25 Exch Rate & BofP 1) Foreign currency is A) the market for foreign exchange.
1. Various shocks on a small open economy
Problem Set 3 Econ 122a: Fall 2013 Prof. Nordhaus and Staff Due: In class, Wednesday, September 25 Problem Set 3 Solutions Sebastian is responsible for this answer sheet. If you have any questions about
FOREIGN EXCHANGE AND CURRENCY
Exchange rates represent the linkage between one country and its partners in the global economy. They affect the relative price of goods being traded (exports and imports), the valuation of assets, and
Lecture 3: Int l Finance
Lecture 3: Int l Finance 1. Mechanics of foreign exchange a. The FOREX market b. Exchange rates c. Exchange rate determination 2. Types of exchange rate regimes a. Fixed regimes b. Floating regimes 3.
real r = nominal r inflation rate (25)
3 The price of Loanable Funds Definition 19 INTEREST RATE:(r) Charge per dollar per period that borrowers pay or lenders receive. What affects the interest rate: inflation. risk. taxes. The real interest
2. Discuss the implications of the interest rate parity for the exchange rate determination.
CHAPTER 6 INTERNATIONAL PARITY RELATIONSHIPS AND FORECASTING FOREIGN EXCHANGE RATES SUGGESTED ANSWERS AND SOLUTIONS TO END-OF-CHAPTER QUESTIONS AND PROBLEMS QUESTIONS 1. Give a full definition of arbitrage.
Balance of Payments Accounting. (guidelines recommended by the IMF International Monetary Fund )
Balance of Payments Accounting (guidelines recommended by the IMF International Monetary Fund ) To understand the factors that affect international trade and lending first requires basic knowledge of Balance
Introduction to Exchange Rates and the Foreign Exchange Market
Introduction to Exchange Rates and the Foreign Exchange Market 2 1. Refer to the exchange rates given in the following table. Today One Year Ago June 25, 2010 June 25, 2009 Country Per $ Per Per Per $
D) surplus; negative. 9. The law of one price is enforced by: A) governments. B) producers. C) consumers. D) arbitrageurs.
1. An open economy is one in which: A) the level of output is fixed. B) government spending exceeds revenues. C) the national interest rate equals the world interest rate. D) there is trade in goods and
1 Multiple Choice - 50 Points
Econ 201 Final Winter 2008 SOLUTIONS 1 Multiple Choice - 50 Points (In this section each question is worth 1 point) 1. Suppose a waiter deposits his cash tips into his savings account. As a result of only
ECON 10020/20020 Principles of Macroeconomics Problem Set 6 Solutions
ECON 10020/20020 Principles of Macroeconomics Problem Set 6 Solutions Dennis C. Plott University of Notre Dame Department of Economics April 9, 2015 Email: [email protected] 1 Name: Dennis C. Plott
QUESTION 1: SHORT VERSUS MEDIUM RUN. 30 points
QUESTION 1: SHORT VERSUS MEDIUM RUN. 30 points Consider an economy that fits the AS-AD model. The labor market equilibrium is given by the AS curve. The equilibrium in the goods market is given by the
The Balance of Payments, the Exchange Rate, and Trade
Balance of Payments The Balance of Payments, the Exchange Rate, and Trade Policy The balance of payments is a country s record of all transactions between its residents and the residents of all foreign
dr Bartłomiej Rokicki Chair of Macroeconomics and International Trade Theory Faculty of Economic Sciences, University of Warsaw
Chair of Macroeconomics and International Trade Theory Faculty of Economic Sciences, University of Warsaw The small open economy The small open economy is an economy that is small enough compared to the
Relationships among Inflation, Interest Rates, and Exchange Rates. J. Gaspar: Adapted from Jeff Madura, International Financial Management
Chapter8 Relationships among Inflation, Interest Rates, and Exchange Rates J. Gaspar: Adapted from Jeff Madura, International Financial Management 8. 1 International Finance Theories (cont) Purchasing
Midterm Exam I: Answer Sheet
Econ 434 Professor Ickes Fall 2001 Midterm Exam I: Answer Sheet 1. (20%) Suppose that I have a short position in yen and I wish to hedge my currency risk over the next three months. Carefully explain how
Agenda. Saving and Investment in the Open Economy. Balance of Payments Accounts. Balance of Payments Accounting. Balance of Payments Accounting.
Agenda. Saving and Investment in the Open Economy Goods Market Equilibrium in an Open Economy. Saving and Investment in a Small Open Economy. Saving and Investment in a Large Open Economy. 7-1 7-2 Balance
CHAPTER 9 MANAGEMENT OF ECONOMIC EXPOSURE SUGGESTED ANSWERS AND SOLUTIONS TO END-OF-CHAPTER QUESTIONS AND PROBLEMS
CHAPTER 9 MANAGEMENT OF ECONOMIC EXPOSURE SUGGESTED ANSWERS AND SOLUTIONS TO END-OF-CHAPTER QUESTIONS AND PROBLEMS QUESTIONS 1. How would you define economic exposure to exchange risk? Answer: Economic
3. a. If all money is held as currency, then the money supply is equal to the monetary base. The money supply will be $1,000.
Macroeconomics ECON 2204 Prof. Murphy Problem Set 2 Answers Chapter 4 #2, 3, 4, 5, 6, 7, and 9 (on pages 102-103) 2. a. When the Fed buys bonds, the dollars that it pays to the public for the bonds increase
FTS Real Time System Project: Trading Currencies
FTS Real Time System Project: Trading Currencies Objective To understand the major determinants of exchange rates In this case, you will trade currencies in the FTS Real Time Forex case. The case includes
CHAPTER 32 EXCHANGE RATES, BALANCE OF PAYMENTS, AND INTERNATIONAL DEBT
CHAPTER 32 EXCHANGE RATES, BALANCE OF PAYMENTS, AND INTERNATIONAL DEBT Chapter in a Nutshell Along with the flows of goods and services being traded between countries, there are corresponding flows of
Chapter 12. National Income Accounting and the Balance of Payments. Slides prepared by Thomas Bishop
Chapter 12 National Income Accounting and the Balance of Payments Slides prepared by Thomas Bishop Preview National income accounts measures of national income measures of value of production measures
International Economic Relations
nternational conomic Relations Prof. Murphy Chapter 12 Krugman and Obstfeld 2. quation 2 can be written as CA = (S p ) + (T G). Higher U.S. barriers to imports may have little or no impact upon private
Theories of Exchange rate determination
Theories of Exchange rate determination INTRODUCTION By definition, the Foreign Exchange Market is a market 1 in which different currencies can be exchanged at a specific rate called the foreign exchange
Practice questions: Set #1
International Financial Management Professor Michel A. Robe Practice questions: Set #1 What should you do with this set? To help students prepare for the exam and the case, several problem sets with solutions
Foreign Exchange markets and international monetary arrangements
Foreign Exchange markets and international monetary arrangements Ruichang LU ( 卢 瑞 昌 ) Department of Finance Guanghua School of Management Peking University Some issues on the course arrangement Professor
e) Permanent changes in monetary and fiscal policies (assume now long run price flexibility)
Topic I.4 concluded: Goods and Assets Markets in the Short Run a) Aggregate demand and equilibrium b) Money and asset markets equilibrium c) Short run equilibrium of Y and E d) Temporary monetary and fiscal
96 97 98 99 00 01 02 03 04 05 06 07 08* FDI Portfolio Investment Other investment
Chartbook Contact: Sebastian Becker +49 69 91-3664 Global Risk Analysis The unwinding of Yen carry trades Some empirical evidence 3 2 1-1 -2-3 -4 October 31, 28 Many years before the sub-prime crisis hit
THE OPEN AGGREGATE DEMAND AGGREGATE SUPPLY MODEL.
THE OPEN AGGREGATE DEMAND AGGREGATE SUPPLY MODEL. Introduction. This model represents the workings of the economy as the interaction between two curves: - The AD curve, showing the relationship between
How To Consistently Make $900 - $9,000 in 48 Hours or Less
Forex & Gold Trading Bootcamp Break-Out Session How To Consistently Make $900 - $9,000 in 48 Hours or Less CHEAT & ACTIVITY SHEET MARK SO (THE HANDSOMEST FOREX TRADER THAT EVER EXISTED ;-) MARK SO (THE
A review of the trade weighted exchange rate index
A review of the trade weighted exchange rate index Hannah Kite 1 Over the past year the Bank has completed a review of the official trade weighted index (TWI). This article documents that review, noting
The relationship between exchange rates, interest rates. In this lecture we will learn how exchange rates accommodate equilibrium in
The relationship between exchange rates, interest rates In this lecture we will learn how exchange rates accommodate equilibrium in financial markets. For this purpose we examine the relationship between
Big Concepts. Balance of Payments Accounts. Financing International Trade. Economics 202 Principles Of Macroeconomics. Lecture 12
Economics 202 Principles Of Macroeconomics Professor Yamin Ahmad Big Concepts Balance of Payments Equilibrium The relationship between the current account, capital account and official settlements balance
Chinese Yuan Non-Deliverable Forward Transactions
Chinese Yuan Non-Deliverable Forward Transactions By entering into Chinese Yuan Non-Deliverable Forward Transactions ( NDF ) with Bank of China (Hong Kong) Limited (the Bank ), you can buy or sell Chinese
Econ 202 Final Exam. Douglas, Spring 2006 PLEDGE: I have neither given nor received unauthorized help on this exam.
, Spring 2006 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Final Exam 1. When the government spends more, the initial effect is that a. aggregate
International Finance
International Finance 7 e édition Christophe Boucher [email protected] 1 Session 1 7 e édition The foreign exchange market and some stylized facts 2 Roadmap 1. Geographical Extent 2. Size
Exchange Rates Revised: January 9, 2008
Global Economy Chris Edmond Exchange Rates Revised: January 9, 2008 Exchange rates (currency prices) are a central element of most international transactions. When Heineken sells beer in the US, its euro
Chapter 20. Output, the Interest Rate, and the Exchange Rate
Chapter 20. Output, the Interest Rate, and the Exchange Rate In Chapter 19, we treated the exchange rate as one of the policy instruments available to the government. But the exchange rate is not a policy
Econ 202 Final Exam. Douglas, Fall 2007 Version A Special Codes 00000. PLEDGE: I have neither given nor received unauthorized help on this exam.
, Fall 2007 Version A Special Codes 00000 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Final Exam 1. On average over the past 50 years, the U.S.
Chapter 4 Determinants of FX Rates
Rauli Susmel Dept. of Finance Univ. of Houston FINA 4360 International Financial Management Chapter 4 Determinants of FX Rates Last Lecture FX is a huge market (the biggest financial market) - Open 24/7-3
½ a mark for rounding up (6 marks) (b) There are a number of costs to the business associated with holding inventory:
EDI LCCI IQ ON DEMAND AWARD IN BUSINESS FINANCE AND BANKING OPERATIONS SAMPLE LEVEL 4 MARKING SCHEME DISTINCTION MARK 75% CREDIT MARK 60% PASS MARK 50% TOTAL 100 MARKS QUESTION 1 (a) Inventory days Receivable
8. Eurodollars: Parallel Settlement
8. Eurodollars: Parallel Settlement Eurodollars are dollar balances held by banks or bank branches outside the country, which banks hold no reserves at the Fed and consequently have no direct access to
This chapter seeks to explain the factors that underlie currency movements. These factors include market fundamentals and market expectations.
EXCHANGE-RATE DETERMINATION LECTURE NOTES & EXERCISES based on Carbaugh Chapter 13 CHAPTER OVERVIEW This chapter seeks to explain the factors that underlie currency movements. These factors include market
This is Foreign Exchange Markets and Rates of Return, chapter 4 from the book Policy and Theory of International Finance (index.html) (v. 1.0).
This is Foreign Exchange Markets and Rates of Return, chapter 4 from the book Policy and Theory of International Finance (index.html) (v. 1.0). This book is licensed under a Creative Commons by-nc-sa 3.0
Fundamentals Level Skills Module, Paper F9. Section A. Monetary value of return = $3 10 x 1 197 = $3 71 Current share price = $3 71 $0 21 = $3 50
Answers Fundamentals Level Skills Module, Paper F9 Financial Management December 2014 Answers Section A 1 A Monetary value of return = $3 10 x 1 197 = $3 71 Current share price = $3 71 $0 21 = $3 50 2
www.indiaforex.in REER NEER India Forex Advisors IFA Classroom: Understanding NEER and REER Dated- 14 th August, 2014
The exchange rate is the weighted average value of a country's currency relative to all major currencies being traded within an index or pool of currencies. There are two exchange rate regimes: NEER (Nominal
A. 1. false; 2. false; 3. true; 4. true; 5. true; 6. true: in units of the domestic bundle; 7. 1 false: this describes 1+inflation
Chapter 11 Purchasing Power Parity Quiz True-False Questions 1. CPP says that you can make a risk-free profit by buying and selling goods across countries. 2. CPP implies causality. It states that foreign
Lecture 10-1. The Twin Deficits
Lecture 10-1 The Twin Deficits The IS-LM model of the previous lectures endogenised the interest rate while assuming that the portion (NX 0 ) of net exports not dependent on income was exogenously fixed.
A New Effective Exchange Rate Index for the Canadian Dollar
A New Effective Exchange Rate Index for the Canadian Dollar Janone Ong, Financial Markets Department A new Canadian-dollar effective exchange rate index (CERI) has been created to replace the C 6 index
Introduction, Forwards and Futures
Introduction, Forwards and Futures Liuren Wu Zicklin School of Business, Baruch College Fall, 2007 (Hull chapters: 1,2,3,5) Liuren Wu Introduction, Forwards & Futures Option Pricing, Fall, 2007 1 / 35
Exchange rates. Exchange rates
6 Exchange rates If all countries of the world used the same currency, international transactions would be very simple. As we know, every country has their own currency, meaning that a rate of exchange
INR Volatility - Hedging Options & Effective Strategies
INR Volatility - Hedging Options & Effective Strategies The purpose of the article is to draw attention on the recent volatility in Indian Rupee, various hedging options and effective hedging strategies.
Business Conditions Analysis Prof. Yamin Ahmad ECON 736
Business Conditions Analysis Prof. Yamin Ahmad ECON 736 Sample Final Exam Name Id # Instructions: There are two parts to this midterm. Part A consists of multiple choice questions. Please mark the answers
Foreign Exchange Risk Management
Foreign Exchange Risk Management Perry D. Mehta Federal Reserve Bank of Richmond, Charlotte Office [email protected] Seminar for Senior Bank Supervisors from Emerging Economies Washington, DC October,
Refer to Figure 17-1
Chapter 17 1. Inflation can be measured by the a. change in the consumer price index. b. percentage change in the consumer price index. c. percentage change in the price of a specific commodity. d. change
1. a. Interest-bearing checking accounts make holding money more attractive. This increases the demand for money.
Macroeconomics ECON 2204 Prof. Murphy Problem Set 4 Answers Chapter 10 #1, 2, and 3 (on pages 308-309) 1. a. Interest-bearing checking accounts make holding money more attractive. This increases the demand
Chapter 16 Output and the Exchange Rate in the Short Run
Chapter 16 Output and the Exchange Rate in the Short Run Prepared by Iordanis Petsas To Accompany International Economics: Theory and Policy, Sixth Edition by Paul R. Krugman and Maurice Obstfeld Chapter