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Exam (elaborations)

FIN 565 Week 8 Final Exam

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1. Question: (TCO A) A high home inflation rate relative to other countries would the homecountry'scurrentaccountbalance,otherthingsbeingequal.Ahighgrowthinthehome income level relative to other countries would the home country's current account balance, other things being equal. (Points :5) 2. Qu...

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  • May 18, 2021
  • 7
  • 2020/2021
  • Exam (elaborations)
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Milestonee
FIN 565 Week 8 Final Exam


(100% Correct Answers)




Question 1.1. (TCO A) A high home inflation rate relative to other countries would the
home country's current account balance, other things being equal. A high growth in the
home income level relative to other countries would the home country's current account
balance, other things being equal. (Points : 5)
increase; increase
increase; decrease
decrease;
decrease
decrease; increase



Question 2.2. (TCO A) Assume the Canadian dollar is equal to $0.98 and the Brazilian real
is equal to $0.28. The value of the Brazilian real in Canadian dollars is (Points : 5)
about 0.3500 Canadian
dollars. about 0.2857
Canadian dollars. about
3.5714 Canadian dollars.
about 1.0204 Canadian
dollars.



Question 3.3. (TCO B) Assume that IRP holds and the euro's interest rate is 9%, whereas the
U.S. interest rate is 12%. Then, the euro's interest rate increases to 11%, whereas the U.S.
interest rate remains the same. As a result of the increase in the interest rate on euros, the
euro's forward ..will in order to maintain IRP. (Points : 5)

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