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1. Assume a Japanese firm invoices exports to the US dollars. Assume that the forward rate and spot rate of the Japanese yen are equal. If the Japanese firm expects the yen to ______ against the dollar, it would likely wish to hedge. It could hedge by_____ yen forward.

a) Appreciate; selling

b) Appreciate; buying

c) Depreciate; buying

d) Depreciate; selling

2. Suppose you have the following exchange rates: 1) $1.155C$ and E.7294/$. Computer the cross exchange rate with the Canadian dollar as the terms currency and the Euro as the base currency.?

3. Suppose a US firm issues a bond denominated in a foreign currency at a 2% lower interest rate than they could issue in the US. Over time, the foreign currency depreciates 2% against the US dollar. The US firm dollar-denominated equivalent cost of funding for this foreign issue is:

a) Approximately on savings

b) About 2% more than issuing in the US

c) About a 2% savings relative to issuing in the US

d) About a 4%saving relative to issuing in the US

4. The exchange rate at the start of the year was $1.2500/E. Now the exchange rate is $1.3750/E. the percentage change in the value of the US dollar over this time period has been.?

5. If the spot rate is $1.265/E Appreciate and then the dollar Appreciate 6%, what is the new exchange rate?

6. in the current international trade environment, countries are increasingly taking steps to strengthen their home currency so as to maximize purchasing power.?

a) T

b) F

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