Term
| Inflation in the United States is currently 3.5% as measured by the most recent consumer price index (CPI) the US 3 year interest rate is currently 5.5% while the Australian 3 year interest rate is currently 4.25% based on these interest rates, the 3 year forward rate premium/discount on the Australian dollar is____________ |
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Definition
=1-((1.0425^3)/(1.055^3))
=3.5% discount |
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Term
In October 2007, analysts estimated the value of the Euro to be $1.72 by the end of a twelve month period. The most recent (realized) spot rate is $1.82. At the same time last year (Oct 2007), the Canadian Dollar was forecasted to be $0.90. The most recent spot rate for the Canadian dollar is $0.78. Calculate the absolute forecast error for the Euro and Canadian dollar over this period.
Euro___________________
Canadian Dollar__________________ |
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Definition
Euro=(1.72-1.28)/1.28
Euro=34.375%
Canadian Dollar=(0.90-0.78)/0.78
Canadian Dollar=15.385% |
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Term
Which of the following is not a forecasting technique mentioned in this textbook
a. accounting based forecasting
b. technical forecasting
c. fundamental forecasting
d. mixed-based forecasting |
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Definition
| A. accounting based forecasting |
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Term
| Economic exposure refers to |
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Definition
| the exposure of a firm's cash flows to exchange rate fluctuations |
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Term
| If a US MNC has the equivalent of $20,000,000 cash outflows in each of two highly negatively correlated currencies. During weak dollar cycles, cash outflows are |
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Definition
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