I already Solve all the Problem in the attached EXCEL file. All what I need is to complete the part in read which is the Explain part, and writ it by your own word
Problem 2.11 it as about The International Monetary System
Problem 3.9 is about The Balance of Payments
Problem 6.8 is about Foreign Currency Derivatives
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I already Solve all the Problem in the attached EXCEL file. All what I need is to complete the part in read which is the Explain part, and writ it by your own word Problem 2.11 it as about The International Monetary System Problem 3.9 is about The Balance of Payments Problem 6.8 is about Foreign Currency Derivatives
I already Solve all the Problem in the attached EXCEL file. All what I need is to complete the part in read which is the Explain part, and writ it by your own word Problem 2.11 it as about The International Monetary System Problem 3.9 is about The Balance of Payments Problem 6.8 is about Foreign Currency Derivatives Problem 2.11 Problem 2.11 Pacific Precision (A): European Sales Pacific Precision is a Hong Kong-based exporter of machine tools. The company's European sales director, Jacque Mayal, has been criticized of late for his performance. He disagrees, arguing that sales in Europe have grown steadily in recent years. Who is correct? Analysis of European Sales200220032004 Total net sales, HK$171,275187,500244,900 Percent of total sales from Europe48%44%39% Total European sales, HK$82,21282,50095,511 Average exchange rate, HK$/€7.48.59.4 Total European Sales, euros (€)€ 11,110€ 9,706€ 10,161 Growth rate of European sales-12.6%4.7% Explain: Problem 3.9 Problem 3.9 Porsche Pricing (B) Using the same basic data as in the previous problem, consider the following. If the dollar continues to fall throughout the year, and the spot rate in 2009 averages $1.6250/€, but the U.S. dollar price is held constant since its introduction in January 2009 at $158,000, what would be the profit margin on each car sold in the U.S.? AssumptionsValues Porsche Panamera price in Europe in 2009 (€)€ 120,000.00 Expected margin on the Panamera on European sales20.0% Average Spot exchange rate in 2009 ($/€)1.6250 If the price in the US market was set at $158,000, and the spot exchange rate averaged $1.6250/€, what would the margin on the Panamera be? Price in US market$158,000 spot exchange rate1.6250 Effective price in euros€ 97,230.77 If Porsche was going to earn a 20% margin on Panamera sales in Europe, the cost of the Panamera had to be 80% of of price. Price€ 120,000.00 Cost-€ 96,000.00 Margin€ 24,000.00 Now, if the effective price earned on US sales was:€ 97,230.77 and the cost was as calculated above-€ 96,000.00 Margin would then be€ 1,230.77 or in percentage1.03% Explain: Problem 6.8 Problem 6.8 Forward Premiums on the Australian Dollar Use the following spot and forward bid-ask rates for the U.S. dollar/Australian dollar (US$/A$) exchange rate to answer the following questions a) What are the mid-rates from the bid-ask rate quotations? b) What is the forward premium for each maturity using the mid-rates from part (a)? Since the exchange rate quotes are direct quotes on the dollar (US$/A$), the proper forward premium calculation is: Forward premium = ( Forward - Spot ) / (Spot) x (360 / days) a)b) US$/A$US$/A$CalculatedForward PeriodDays ForwardBid RateAsk RateMid-RatePremium spot0.916300.917000.91665 1 month300.914770.915510.91514-1.9768% 2 months600.913130.913880.91351-2.0586% 3 months900.911560.912330.91195-2.0531% 6 months1800.905420.906210.90582-2.3640% 12 months3600.891550.892420.89199-2.6908% 24 months7200.864880.866020.86545-2.7928% Explain: c) Which maturities have the smallest and largest forward premiums? The 24 month forward rate has the largest premium, while the 1 month forward possesses the smallest premium.