Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Microeconomics Expert

Suppose you (or you have friends or relatives) work in a financial institution, how you would advise your clients with regard to the following:

(a) A U.S. resident can earn 6% interest on a one-year bank deposit of US$100,000 at home. Alternatively, she can convert the US$100,000 into Euro and earn 4% on a one-year bank deposit in Germany. Suppose the initial exchange rate is 1.5 Euro/US$.

Suppose that she wishes to withdraw her money at the end of the year and the exchange rates changes to 1.45Euro/US$ at the end of the year. Identify and discuss which deposit will give her a higher return, and by how much (measured in U.S. dollars).

(b) At the end of the year, the U.S. investor referred to in (a) wishes to travel to Germany to visit relatives. She sees that the £ /US$ exchange rate is 0.91£/US$, and the £/Euro exchange rate is 0.65£/Euro, and the Euro/US$ conversion is 1.45Euro/US$. Should she convert the US$10,000 she wishes to take to Germany directly from US$ to Euro, or should she first convert to £, and then to Euro? Discuss how much (in Euro) does she make/lose by converting to £ first.

(c) Suppose you have a corporate client IXM which sells computers in Japan and receives revenues in yen. However, IXM's expenses are in US dollars. describe how you would advise your client to hedge against currency risks.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M941123

Have any Question? 


Related Questions in Microeconomics

Assignment production cost analysis and estimation applied

Assignment: Production Cost Analysis and Estimation Applied Problems Please complete the following two applied problems: Problem 1: William is the owner of a small pizza shop and is thinking of increasing products and lo ...

Assignment voluntourism-go to httpwwwvoluntourismorgreview

Assignment: VolunTourism- Go to http://www.voluntourism.org Review the home page to understand the resources available on this web site and to get a feeling for what VolunTourism is.On the menu (left screen) under "Who A ...

The economy is full employment now the government wants to

The economy is full employment. Now the government wants to change the composition of demand toward investment and away from consumption without, however, allowing aggregate demand to beyond full employment. What is requ ...

Question 1consider the market for a course of antibiotics

Question 1. Consider the market for a course of antibiotics. Suppose the supply of antibiotics follows P = 5 + 2Qs and the demand follows P = 20 - 2Q D . Here, Q represents antibiotics, denominated in millions of units. ...

Asignment 11 given the production function asy 68 135x1

Assignment 1 1. Given the production function as: y = 6.8 + 1.35x 1 + 7.7x 2 - 8.5x 3 + 0.4x 4 - 0.06x 1 2 - 1.25x 2 2 + 0.2x 1 x 2 and assuming x 3 = 0.32 and x 4 = 4.25 i. Form production function in iso-quant set. ii. ...

Instruction please answer all questions all questions carry

Instruction: Please answer ALL questions. All questions carry equal marks. Please do not write over 2000 words for the entire assignment. 1. a. Using the graph shown, analyze the effect a $300 price ceiling would have on ...

Economic term paperempirical project the research project

Economic Term Paper Empirical Project The research project should be about 10 pages and should explain your data collection, model, and findings. The project (due by the final exam date) is worth 30% of your final grade. ...

Questionsexercisesseminar 11nbsp discuss what you

Questions/Exercises Seminar 1 1.  Discuss what you understand by the following: a) the law of demand b) the conditions of demand c) a demand curve d) a normal good e) an inferior good f) a Giffen good G) the law of suppl ...

Assignmentlearning objectives covered1explain 3 ways the

Assignment Learning Objectives Covered: 1. Explain 3 ways the statement of goals, application of rewards, and institution of discipline affect and motivate ethical behavior in individuals 2. Demonstrate how roles and aut ...

Economics and quantitative analysis assignmenttopic -

ECONOMICS AND QUANTITATIVE ANALYSIS ASSIGNMENT TOPIC - REGRESSION ANALYSIS Instructions - Background One of the biggest challenges in the higher education sector has been the recent growth of online universities. The Onl ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro