INTERNATIONAL FINANCE Quiz01 15Feb10 This is only a sample quiz

Name:________________

1. If the British pound (£) is selling for $1.6385, and the Canadian dollar (C$) is selling for $.6591, what is the cross rate between... a) the £ and the C$? (£/C$) = ______ b) the C$ and the £? (C$/£) = _____ c) the US$ and the C$? ($/C$) = ______ 2. Assume that $/Ps=.09160 in Mexico City, and Ps/€ = 11.8157 in Zürich and €/$=.9229 in NYC. Start with $1M and show the trades (a,b,c) that would yield an arbitrage profit. Note: in sell& buy answers, show both currency and amount. a) city___________ b) city___________ c) city___________ sell__________ sell__________ sell__________ buy____________ buy____________ buy____________

3. Calculate the arbitrage profit as a percent of original investment.__________% 4. Assume Deutsche Bank quotes €/C$ @ .60805-15 and Royal Bank of Canada quotes €/C$ @ .60818-20. a) Is there an arbitrage opportunity? Y/N? ____ b) If so, one would buy from __________ and sell to _____? c) Calculate the return (i.e. the profit as a %) _______% 5. Fill in the blanks in the following cross rate table. Note: Each cell is the number of units of the FIRST ROW currency per single unit of the LEFT HAND COLUMN US$ US$ € ¥ £ Ps ___ ___ ___ ___ ___ € ___ ___ ___ ___ ___ ¥ ___ ___ ___ ___ ___ £ ___ ___ ___ ___ ___ Ps ___ ___ ___ ___ ___

Given: Merchandise imports Merchandise exports Service exports Services imports Investment income receipts Investment income payments Unilateral Transfers (net) Calculate: a) balance of trade b) Current account c) Capital account 7.£.¥ ? .6. $________ $________ $________ 89469 96000 10901 10819 4032 17099 4531 What are the keyboard strokes for €.

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