Business & Finance homework help

Business & Finance homework help. Question 1: What is the impact of a weak home currency on the home economy, other things being equal? What is the impact of a strong home currency on the home economy, other things being equal?
Question 2: The U.S., Argentina, and Canada commonly engage in international trade with each other. All the products traded can easily be produced in all three countries. The traded products are always invoiced in the exporting country’s currency. Assume that Argentina decides to peg its currency (called the peso) to the U.S. dollar and the exchange rate will remain fixed. Assume that the Canadian dollar appreciates substantially against the U.S. dollar during the next year.
a. What is the likely effect (if any) of the Canadian dollar’s exchange rate movement over the year on the volume of Argentina’s exports to Canada? Briefly explain.
b. What is the likely effect (if any) of the Canadian dollar’s exchange rate movement on the volume of Argentina’s exports to the U.S.? Briefly explain.
Question 3: Assume the following information:
Beal Bank Yardley Bank
Bid price of New Zealand dollar $.401 $.398
Ask price of New Zealand dollar $.404 $.400
Given this information, is locational arbitrage possible? If so, explain the steps involved in locational arbitrage, and compute the profit from this arbitrage if you had $1,000,000 to use. What market forces would occur to eliminate any further possibilities of locational arbitrage?
Question 4: Explain why the value of the British pound against the dollar will not always move in tandem with the value of the euro against the dollar.
Question 5: Assume the following information:
Spot rate of Mexican peso = $.100
180-day forward rate of Mexican peso = $.098
180-day Mexican interest rate = 6%
180-day U.S. interest rate = 5%
Given this information, is covered interest arbitrage worthwhile for Mexican investors who have pesos to invest? Explain your answer.

Business & Finance homework help