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Need help to solve these questions please write out the caculations. Thank you..... Brenda C) Consider the following illustrative exchange rate: US dollars required to buy one Unit of Foreign Currency Japanese yen 0.009 Australian Dollar 0.650 a. Are these currency prices direct quotations or indirect quotations b. Calculate the indirect quotations for yen and the Austrian dollar. c. What is a cross rate? Calculate the two cross rates between yen and Austrian dollar. d. Assume that citrus product can produce a liter of orange juice and ship it to Japan for $1.75. If the firm wants a 50% mark up on the product, what should the orange juice sell for in japan? e. Now assume that citrus products begin producing the same liter of orange juice in japan. The product cost 250 yen to produce and ship to Australia, where it can be sold for 6 Australian dollars. What is the US dollar profit on the sales? f. What is the exchange rate risk? F) What is the interest rate parity? Currently, you can exchange 1 yen for 0.0095 us dollar in the 30-dau forward market and the risk-free rate on 30-day securities is 4% in both japan and the United States. Does interest purchases power parity holds. If not, which securities is 4% in both Japan and the united Stated. Does interest rate parity hold? If not, which securities offer the highest expected return? G) What is purchasing power parity (PPP)? If grapefruit juices cost $2 a liter in the United States and purchasing power parity holds, what should be the price of grapefruit juice in Australia?


Paper#10444 | Written in 18-Jul-2015

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