国际金融学习题

End of Chapter Questions

Chapter 1

ing the following data (billions of dollars) for a given year, calculate the

balance on merchandise trade; balance on goods, services, and income; and the current account balance. Indicate whether these balances are deficits or surpluses.

Exports of goods 719 Imports of goods 1,145

Exports of services 279 Imports of services 210

Net unilateral transfers -49 Income receipts 284

Income payments 269 Statistical discrepancy 11

2.Write out a positive and negative aspect of a nation being a net debtor. Do the

same thing for a nation that is a net creditor.

3.Explain why a nation might desire to receive both portfolio investment and direct

investment from abroad.

4.Write out a single equation showing the relationship between the current

account and net capital inflows, including changes in official reserves and other government assets, as they relate to investment spending and domestic saving.

5.Suppose a nation spends 10 percent of its income on investment and the private

sector saves 5 percent. Further, suppose the national government runs a deficit of 1 percent. Explain what the above conditions mean for the nation’s capital account and current account. How might the imbalance be corrected?

Chapter 2

6.Suppose the U.S.-dollar-per-currency exchange rate of the euro was 1.2201 on

Thursday and 1.2168 on Friday. Did the euro appreciate or depreciate relative to the U.S. dollar? How much was the appreciation/depreciation (in percenta ge change terms)?

7.

8.

rates: 1.234$/€, and $/£=1.702. In London, the euro equivalent rate of the pound is

1.425€/£. Is there an arbitrage opportunity? Why or why not? Calculate the profit

to be made on $1,000,000.

9.Suppose we observe the following information for the euro area, Canada, and the

the U.S. dollar using 2003 as the base year. Do the values you calculated indicate an appreciation or depreciation of the U.S. dollar? What is the rate of appreciation or depreciation?

10.In January 2000, the spot exchange rate for the euro was 1.05$/€. In May 2004,

the rate was 1.19$/€. In January 2000, the euro-area CPI was 107.5 and the U.S.

CPI was 112.7. In May 2004, the euro-area CPI was 116.4 and the U.S. CPI was 122.2. Based on this information, in nominal terms did the euro appreciate or depreciate against the dollar? What was the rate of appreciation or depreciation?

Chapter3

11.List all of the various types of exchange-rate arrangements. Order the list of

exchange-rate arrangements from fi xed to most flexible.

12.Describe two primary functions of the International Monetary Fund.

13.Suppose the value of the U.S. dollar is pegged to gold at a rate of $50 per ounce.

Next suppose that the value of the British pound is pegged to the U.S. dollar at a rate of $1.50 per pound, and the value of the Canadian dollar is pegged to the U.S.

dollar at a rate of $1.38 Canadian dollars per U.S. dollars. Calculate the value of the Canadian dollar and the British pound relative to gold.

ing the information in Problem 3, calculate the exchange rate between the

Canadian dollar and the British pound.

15.Suppose Argentina decides to peg the value of its currency, the peso, to a basket

consisting of 0.50 U.S. dollars and 0.50 euros. Further suppose the exchange rate between the U.S. dollar and the euro is 1.10$/€. If the basket constitutes one peso, what is the appropriate exchange value between the peso and the dollar, and between the peso and the euro?

16.Based on the information in Problem 5, what is the weight assigned to the U.S.

dollar in the currency basket? What is the weigh assigned to the euro?

17.What is the principle responsibility of a currency board? What three main

restrictions on a currency board make it different from a typical central bank? 18.What factors do you think should be considered when determining the rate of

crawl for a crawling-peg exchange-rate system?

19.What, in your opinion, is the chief difference between a currency- board system

and dollarization?

Chapter4

20.Suppose the following situation prevails in the foreign exchange and

Eurocurrency markets for the euro(€) and the British pound (£).

One-year Eurocurrency rates:

Euro 3.125%

British pound 4.250%

Exchange rates:

Spot 1.5245€/£

One-year forward 1.4575€/£

Explain how an individual would profit from financial arbitrage in this situation.