How many Swiss francs can one U.S. dollar buy given that one unit of Swiss franc can
Question:
How many Swiss francs can one U.S. dollar buy given that one unit of Swiss franc can purchase $0.71?
Problem B
The $1 can purchase €1.0279, how many dollars can you purchase for one unit of euro?
Problem C
Last year, a U.S. investor converted his U.S. dollars to yen and purchased 100 shares of stock in a Japanese company at a price of ¥3,150 per share. The stock's total purchase cost was ¥315,000. In the currency market at the date of acquisition ¥1 = USD 0.00952. Today, the stock is selling at a price of ¥3,465 per share, and in the currency market USD 1 = ¥130. What would be the realized return of the investor on his initial dollar investment from holding the stock if the stock does not pay a dividend and the investor were to sell the stock today and convert the proceeds back to U.S.
dollars?
Problem D
A Nike Shoes costs $50 in the United States. Today, forex exchange rates were observed at:
• USD 1 = €1.0279
• €1 = 8.1794 Norwegian Krones
On the assumption that the currency markets are efficient and purchasing power parity holds worldwide, what should be the price of the same Nike Shoes in Norway?
Problem E
The nominal rate on a 6-month, risk-free U.S. securities is 6%. Currently in the spot market, $1 U.S. = ¥104.84. In the 6-month forward market, $1 U.S. = ¥104.84. What is the current nominal interest rate on 6-month risk-free Japanese securities assuming interest rate parity holds?
Problem F
Today, ¥288 could be purchased in the foreign exchange market for $2. If the Japanese yen is expected to depreciate by 8% tomorrow, how many yen could two units of USD buy tomorrow?
Problem G
One unit of British pound can purchase USD 1.82 today in the foreign exchange market and it is predicted that the U.S. Dollar will depreciate by 12% against the British pound over the next one month. How many USD will £1 buy in 30 days?
Problem H
Determine the cross exchange rate between the pound and the euro if currently, £1 equals USD 1.569 and USD 1 equals €1.0279.
Problem I
If the spot rate of the Saudi Riyal (SAR) is 1.51 per USD and the 180-day forward rate is 1.30 SAR per USD, then the forward rate for the SAR is selling at a to the spot rate. (Determine if premium or discount)
Problem J
Intel imports silicon chips from Canada. Each chips costs 8 Canadian dollars. Intel sells the silicon chips in its European Market for €8. Today's exchange rates are quoted at
• 1 Canadian Dollar = USD 0.6784
• €1 = USD 0.9406
How much profit measured in USD does Intel make on each unit of silicon chips sold?
Fundamentals of Corporate Finance
ISBN: 978-1259024962
6th Canadian edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim