Questions from Financial Management

Q: Assume U.S. interest rates fall relative to British interest

Assume U.S. interest rates fall relative to British interest rates. Other things being equal, how should this affect (a) the U.S. demand for British pounds, (b) the supply of pounds for sale, and (...

Q: Here are exchange rates for the Japanese yen and British pound at

Here are exchange rates for the Japanese yen and British pound at the beginning of each of the last five years. Your firm wants to determine which currency is more volatile as it assesses its exposure...

Q: During the Asian crisis, Hong Kong and China successfully intervened (

During the Asian crisis, Hong Kong and China successfully intervened (by raising their interest rates) to protect their local currencies from depreciating. Nevertheless, these countries were also adve...

Q: The country of Quinland has large capital flows with the United States

The country of Quinland has large capital flows with the United States. It has no trade with the United States and will not have trade with the United States in the future. Its interest rate is 6 perc...

Q: The country of Zars has large capital flows with the United States

The country of Zars has large capital flows with the United States. It has no trade with the United States and will not have trade with the United States in the future. Its interest rate is 6 percent,...

Q: The country of Vezot has massive capital flows with the United States

The country of Vezot has massive capital flows with the United States because it has no restrictions on the movement of investment funds into or out of the country. Its inflation rate just increased s...

Q: The country of Neeland has stable and predictable international trade flows with

The country of Neeland has stable and predictable international trade flows with the United States. Neeland periodically makes the news because its government might have problems repaying its debt owe...

Q: The New Zealand dollar’s spot rate was equal to $0.

The New Zealand dollar’s spot rate was equal to $0.60 last month. New Zealand conducts much international trade with the United States, but the financial (investment) transactions between the two coun...

Q: Assume that the U.S. income level rises at a

Assume that the U.S. income level rises at a much higher rate than does the Canadian income level. Other things being equal, how should this affect (a) the U.S. demand for Canadian dollars, (b) the...

Q: Assume that the Japanese government relaxes its controls on imports by Japanese

Assume that the Japanese government relaxes its controls on imports by Japanese companies. Other things being equal, how should this affect (a) the U.S. demand for Japanese yen, (b) the supply of ye...