Concept explainers
a)
To find: The preference of Person X is $100 or £100
Introduction:
The cross rate is the implicit rate of exchange between two currencies (mainly they are not Country U) that are quoted in some other third currency (generally the US$).
b)
To find: The preference of Person X SF100 or £100
Introduction:
The cross rate is the implicit rate of exchange between two currencies (mainly they are not Country U) that are quoted in some other third currency (generally the US$).
c)
To find: The cross rates for Country S’s franc in term of Country U’s pounds and the cross rates for the Country U’s pounds in term of Country S’s franc.
Introduction:
The cross rate is the implicit rate of exchange between two currencies (mainly they are not Country U) that are quoted in some other third currency (generally the US$).
Want to see the full answer?
Check out a sample textbook solutionChapter 21 Solutions
Fundamentals of Corporate Finance
- 1. The foreign exchange market for Swiss francs (CHF) is shown below; the U.S. dollar is the pricing currency and the current exchange rate is $1.05/CHF. es/CHF 1.05/CHF = e D QCHF millionsarrow_forwardif 1 OMR = $ 2.60, so what is the exchange rate in terms of 1 US$?arrow_forwardIn the Wall Street Journal, you observe that the British pound (£) is quoted at $1.65. The Australian dollar (A$) is quoted at $0.60. What is the value of the British pound in Australian dollars? a. £2.75 b. £0.36 c. A$0.36 d. none of the above e. A$2.75arrow_forward
- Suppose the Japanese yen exchange rate is ¥116 = $1 and the British pound exchange rate is £1 = $1.27. a. What is the cross-rate in terms of yen per pound? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. Suppose the cross-rate is ¥156 = £1. What is the arbitrage profit per dollar? Note: Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616. a. Cross-rate b. Arbitrage profit per dollar /£arrow_forwardSuppose the Japanese yen exchange rate is ¥116 = $1 and the British pound exchange rate is £1 = $1.27. a. What is the cross-rate in terms of yen per pound? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. b. Suppose the cross-rate is ¥156 = £1. What is the arbitrage profit per dollar? Note: Do not round intermediate calculations and round your answer to 4 decimal places, e.g., .1616. a. Cross-rate b. Arbitrage profit per dollar ¥ 147.32 /£ 0.0600arrow_forwardSuppose the exchange rate between the U.S. dollar and the Swedish krona was 9.0 krona = $1, and the exchange rate between the dollar and the British pound was £1 = $1.4. What would be the exchange rate between Swedish kronas and pounds? Round your answer to two decimal places. ___ kronas per poundarrow_forward
- Based on the reading and the table above, is the exchange rate of dollars to pounds fixed or flexible? Explain your answer.arrow_forwardSuppose the exchange rate between US dollars and Swiss francs is SF 1.41=\$1.00 , and the exchange rate between the U.S. dollar and the euro is \$1.00=0.64 curos. What is the cross rate of Swiss francs to euros?arrow_forwardWhich do you think is stronger, the U.S. dollar or Euro? Why?arrow_forward
- Suppose the exchange rate between U.S. dollars and British Pounds is $1.00 = 1.70 Pounds and the exchange rate between the U.S. dollar and the Euro is $1.00 = 1.24 Euros. What is the direct quote cross rate of one Pound to the euro? (How many Euros will one Pound purchase?) Instruction: Type your answer in euros, and round to two decimal places.arrow_forwardII. PROBLEMS Suppose that the economy has the following money supply and demand equations: Money Supply: M = 8000 Money Demand: M= 10,000 – 40,000r where money is in billions of dollars and interest rates, r, is written as a decimal (e.g., an interest rate of 10% would be written as .1 in the equation). A. Determine the equilibrium interest rate and quantity of money. B. What will happen in the money market if the interest rate is currently 10%? What is the amount of excess supply of or excess demand for money? C. Show in graph that at this interest rate (10%) there is disequilibrium in the money market. 2. Assume that a particular bank has excess reserves of Php800,000 and checkable deposits of Php1,500,000. If the reserve ratio is 20%, what is the size of the bank's actual reserves? 3. Suppose that GRAB Bank is a newly created bank in your hometown. Consider the following transactions: Owners of the bank sold shares of stocks to the public (which includes owners' equity) amounting to…arrow_forwardDid the euro appreciate or depreciate? Is it worth more or less than 1 dollar?arrow_forward
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage LearningFundamentals Of Financial Management, Concise Edi...FinanceISBN:9781337902571Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning