CECN 606 Final Exam Questions and Answers-3 QUESTION AND ANSWERS  100% CORRECT

CECN 606- Final Exam Questions and Answers Chapter 2 1. Refer to the exchange rates given in the following table: Country (currency) June 25, 2010 June 25, 2009 FX per $ FX per £ FX per € FX per S Australia (dollar) 1.152 1.721 1.417 1.225 Canada (dollar) 1.037 1.559 1.283 1.084 Denmark (krone) 6.036 9.045 7.443 5.238 Curo 0.811 1.215 1.000 0.703 Hong Kong (dollar) 7.779 11.643 9.583 7.750 India (rupee) 46.36 69.476 57.179 48.16 Japan (yen) 89.35 134.048 110.308 94.86 Mexico (peso) 12.697 18.993 15.631 13.22 Sweden (krona) 7.74 11.632 9.577 7.460 United Kingdom (pound) 0.667 1.000 0.822 0.609 United States (dollar) 1.000 1.496 1.232 1.000 Source: U.S. Federal Reserve Board of Governors. H.10 release: Foreign Exchange Rates. Based on the table provided, answer the following questions: a. Compute the U.S. dollar-yen exchange rate and the U.S. dollarCanadian dollar exchange rate Es/cs on June 25, 2010, and June 25, 2009. Answer: June 25, 2009: E = 1/(94.86) = $0.0105/ June 25, 2010: E = 1/(89.35) = $0.0112/ June 25,2009: = 1/(1.084) = $0.9225/C$ June 25,2010: = 1/(1.037) = $0.9643/C$ b. What happened to the value of the U.S. dollar relative to the Japanese yen and Canadian dollar between June 25, 2009, and June 25, 2010? Compute the percentage change in the value ofthe U.S. dollar relative to each currency using the U.S. dollar-foreign currency exchange rates you computed in (a). Answer: Between June 25, 2009 and 2010, both the Canadian dollar and the Japanese yen appreciated relative to the U.S. dollar. The percentage appreciation in the foreign currency relative to the U.S. do