Question : 37. Which of the following correct if you have contracted to : 1284468

37. Which of the following is correct if you have contracted to purchase 1,000 Swiss francs 3 months forward at a rate of SFr1.6/$? 
A. You pay approximately $625 today for the francs.
B. You pay $1,600 today for the francs.
C. You pay approximately $625 3 months from now for the francs.
D. You pay $1,600 3 months from now for the francs.

38. If the spot indirect exchange rate of Mexican pesos for U.S. dollars is 9.8/1 and the peso is trading at a forward premium of 3%, then you will receive: 
A. more than 9.8 pesos per dollar in the future.
B. less than 9.8 pesos per dollar in the future.
C. 9.83 pesos per dollar in the future.
D. 10.09 pesos per dollar in the future.

39. If the spot exchange rate between euros and dollars is €1.5/$ before the dollar depreciates by 10%, how many dollars will it now (after the depreciation has occurred) take to pay an invoice of €500? 
A. $366.67
B. $370.37
C. $750.00
D. $825.00

40. The theory that goods in a foreign country should be priced approximately equal after currency translation to goods in a host country is referred to as the law of: 
A. exchange rates.
B. large numbers.
C. spot rates.
D. one price.

41. If prices in the United States rise less rapidly than in Canada, which of the following would be expected according to purchasing power parity? 
A. The value of the Canadian dollar will decline, relative to the U.S. dollar.
B. The value of the U.S. dollar will decline, relative to the Canadian dollar.
C. Inflation will increase in Canada.
D. The price of gold will decline.

42. Which of the following would you expect to be nearly equal across countries? 
A. Nominal interest rates
B. Real interest rates
C. Inflation rates
D. Forward premium

43. How much wealthier would you be 1 year from now if you exchange $100,000 into Hong Kong dollars today at an indirect rate of HK$7.8/$, earn 7% on your Hong Kong investment, and exchange back at a rate of HK$8.0/$, as compared to investing in the United States at 4.0%? 
A. -$2,600
B. $325
C. $2,000
D. $5,744

44. If the difference between forward and spot exchange rates is positive, interest rate parity would predict that: 
A. the difference in interest rates between countries will be negative.
B. the difference in interest rates between countries will be positive.
C. there will be no difference in interest rates between countries.
D. the difference will be quickly eliminated.

45. What can be said about the spot exchange rate of dollars for pounds if nominal interest rates are higher in the United States than in the United Kingdom? 
A. It should exceed the forward rate of dollars for pounds.
B. It should be less than the forward rate of dollars for pounds.
C. It is expected to increase.
D. It is expected to remain constant.

46. U.S. investments with a 1-year maturity can be made for 6% and Swiss 1-year investments can be made for 3%. If the spot exchange rate is SFr1.6/$, which of the following 1-year forward exchange rates would convince you to invest in Switzerland? 
A. SFr1.55/$
B. SFr1.60/$
C. SFr1.65/$
D. SFr1.70/$