跨国公司财务管理基础第五版答案

跨国公司财务管理基础第五版答案内容摘要：

th more in dollar terms, it has appreciated against the dollar. The amount of euro appreciation is ( )/ = %. b. By how much has the dollar appreciated or depreciated against the euro over this period? ANSWER. The flip side of franc appreciation is dollar depreciation. The dollar has depreciated by an amount equal to 4. In early August 2020 (the exact date is a state secret), North Korea reduced the official value of the won from $ to $. The black market value of the won at the time was $. a. By what percent did the won devalue? ANSWER. Using Equation , the won devalued ($$)/$)=% b. Following the initial devaluation what further percentage devaluation would be necessary for the won to equal its black market value? ANSWER. % 5. On Friday, September 13, 1992, the lira was worth DM . Over the weekend, the lira devalued against the DM to DM . a. By how much has the lira devalued against the DM? ANSWER. Using Equation , the lira devalued by ( )/, or %. b. By how much has the DM appreciated against the lira? ANSWER. Using Equation , the DM appreciated against the lira by [(1/) (1/)]/(1/), or %. c. Suppose Italy borrowed DM 4 billion, which it sold to prop up the lira. What were the Bank of Italy39。 s lira losses on this currency intervention? ANSWER. Prior to devaluation, DM billion was worth Lit (4 billion/). Following devaluation, the DM 4 billion borrowing would cost Lit (4 billion/) to repay. Hence, the Italian government would lose Lit 4 billion x [(1/) (1/)] = Lit 109,716,164344, or DM 138,384,998 at the new exchange rate. d. Suppose Germany spent DM 24 billion in an attempt to defend the lira. What were the Bundesbank39。 s DM losses on this currency intervention? ANSWER. The Bundesbank would have bought Lit 24 billion/. Following lira devaluation, these lira would be worth DM (24 billion/) x , or DM 23,169,690,012. The result is a foreign exchange loss for the Bundesbank of DM 830,309,988 on this currency intervention. 6. At the time Argentina launched its new exchange rate scheme, the euro was trading at $. Exporters and importers would be able to convert between dollars and pesos at an exchange rate that was an average of the dollar and the euro exchange rates, that is, P1 = $ 177。 . a. How many pesos would an exporter receive for one dollar under the new system? ANSWER. Under the new system, P1 = $ + = $ + $$. The peso value of a dollar is thus 1/, or $1 = . This exchange rate is equivalent to dollar appreciation of % against the peso. b. How many dollars would an importer receive for one peso under the new system? ANSWER. As shown in the answer to Part a, P1 = $. This exchange rate is equivalent to peso devaluation against the dollar of %. SUGGESTED ANSWERS TO ”THE EURO REACTS TO NEW INFORMATION” 1. Explain the differing initial and subsequent reactions of the euro to news about the European Central Bank’s moary policy. Give full details, drawing on any theories you are familiar with. ANSWER. The initial reaction is based on the expectation of no tightening in the money supply. The result will be higher inflation than previously expected and–according to purchasing power parity–a depreciating euro. The euro’s subsequent reaction was based on the view that moary policy would in fact be tightened (that’s the objective of an interest rate increase) and inflation would be reduced. At the same time, a higher real interest rate would be expected to attract more capital and boost the euro’s value as well. 2. How does a strong pound reduce the threat of imported inflation and work against higher interest rates? ANSWER. A weak pound will bring higher prices of foreign goods and services, enabling domestic producers to raise their prices and leading to higher inflation. Conversely, a stronger pound will bring lowerpriced foreign goods and services, putting downward pressure on domestic prices and reducing the threat of inflation. Lower inflation will lead–via the Fisher effect–to lower interest rates. At the same time, the expectation of lower inflation means the Bank of England will be under less pressure to raise interest rates to fight nonexistent inflation. 3. Which . manufacturers are likely to be pressured by a strong pound? ANSWER. Those British manufacturers who pete with imports or who export will be hurt by a stronger pound because foreign petitors will see their poundequivalent prices fall. In addition, British manufacturers who use domesticallysourced inputs in petition with those who use imported inputs will suffer. 4. Why might higher pound interest rates send sterling even higher? Give two possible reasons. ANSWER. Higher British interest rates occasioned by a tightening of moary policy will lead to lower expected inflation. According to purchasing power parity, countries with lower rates of inflation will tend to see their currencies appreciate relative to those of countries with higher rates of inflation. At the same time, if the higher nominal interest rate is also a higher real interest rate, this will attract capital to the . seeking to earn the higher real return. The greater demand for sterling for investment purposes will boost its value. 5. What tools are available to the European Central Bank and the Bank of England to manage their moary policies? ANSWER. Both central banks can use open market operations–which involves buying and selling bonds denominated in their currencies to regulate the money supply. It may be more difficult for the ECB, however, as it doesn’t have Treasury bonds denominated in euros but there will be other bonds issued in the euro that it can buy or sell. The central banks can also raise or lower the interest。