One month ago, the Mexican peso (Ps)–U.S. dollar exchange rate was Ps9.0395/$ ($0.1106/Ps). This month, the exchange rate is Ps9.4805/$ ($0.1055/Ps). State which currency appreciated and which depreciated over the last month, and then calculate both the percentage appreciation of the currency that rose in value and the percentage depreciation of the currency that declined in value.
Answer to relevant QuestionsUsing the data presented in Figure 18.1, calculate the spot exchange rate on Wednesday between Canadian dollars and British pounds (in pounds per Canadian dollar). The current spot exchange rate is ¥109.43/$. A particular commodity sells for $5,000 in the United States and ¥600,000 in Japan. a. Does the law of one price hold? If not, explain how to profit through arbitrage. b. If it ...A German company manufactures a specialized piece of manufacturing equipment and leases it to a U.K. enterprise. The lease calls for five end-of-year payments of £1 million. The German firm spent €3.5 million to produce ...If the underlying stock price is $25, indicate whether each of the options below is in the money, at the money, or out of the money. a. A call option expires in three months and has X = $40. The underlying stock is worth $42 today. In three months, the stock may increase by $7 or decrease by $6. The risk-free rate is 2% per year. Use the binomial ...
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