托马斯国际金融课后习题答案

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1、Suggetednws oquestions and polems(n te eboo)Chape 2.Digee， atleastas generastatemet. emeaing ofacurrenacout suls is that he ountry isexprtig more good and serve han it s iportig. One ighteasil jud tat this i no oodhecunry isproucinggods and ervic that aeexorted，but te country i ntat te ame tmgtin he

2、 imports f goodsan serices tat wold alow it do mreconsmion and domesc investmet. I this wa crntaccount defic gt be coideredodthe extr import llo the conty o osume nnestdomstcally mohan the alu fitcurrent roducinoermenin o a current cc supu stht te coutr is engging iforign fiacialinstmeniis buldig u

3、its las o foregners, and this as to ntonlwelth. Thissundgood, but as oted ove it coe ath csffregoingurrentdomstic purhases f goods n erces A currt accon defcitis thecouty rigdow is caimsn feignersor incrsing its idebtedessoreigners. Thi sundsba, but comes with te beei f higheleels of curret msi exen

4、de.Dfeent ountries at difnt tmes may wehthe alane of these st an enefits dferetly, so ta we anno smlysy tha a urret accuturplusisbett than a curen acoun eficit.4.Disagee. If the country ha a surpu（a psitie alue) for it offical setlents balane, tn the vle for t officilreserves alane must a negati vlu

5、e f he sae mun (so that th two ad to zeo). nate vlue r ts asset im meansha fud re fig otinod f the ounrt acie or f tse kins ofasets. Thu, he countryi incrasnits holdinso offiialresev assets.6Ie e is trnctio in whicforig offal hoin f U.S. assesincrse. Ti is poitive (credit) em fr offiial eerve asset

6、neati (bi） temorpivate cpil l a h U.S. bank acquire pound ank deposi Thde ite conriutes to a U.deicit in he fficil settemnt ance (while thectiem is rrded blowth line, pemtng the offcialsettlments blnceobein iit）. llther raiosinvolvdebitand crei itemboh owhih ar cludedin the fical elementsbalance, so

7、 that heydo no rety ontu to adii(or surplu) in thefficial etlements baance.8 a.erchands de banc:$30-19 $132Goods and evics lane：33 - 198 + 196 - = $24urrentaccout balance: $30 - 9 +96 - 2 + 8 = $119Ofiiaetleet baance： $3- + 196 - 204+ 3 8 02 202 + 4 = 2 bChange in oicial reserve ssets (net) =-oficis

8、ttlements lne=-$23.Th country is ncreasig itsnt holns of officil erve assets.10.a.teraonainvtment positin(illin): 30 + 2 15 - 40-2 $0. Te cont is nether an ntrtinal cditor nor a debto It holding of nrnation set equls its iablie toforgnes. b.A crrent counturlusprmit the county to add to itsn claims n

9、oreigers.or thi reasn the countys intrnationa invemnt pstionwilbecomea positiv vlu.he flow crease i etforeign ts resutn the sc f et foregn asse becomig ositve.Chaper 32.Exort of mechandise nd servicesrul in ply f foegnuecy n he oren exhane maket Domstic sellersoften wanttob aid usi omesticcurecy, we

10、the oegnbursan to pay n thircurrency.Ith eso aing for tesexports, frig crris excange fordomst urenc, creainsupy of foeigcurrency. Inerntiona caia nflows rstin a suppl of orein crrenin hefreign exchngearke. n minginvetes in domtc fiana asse，foennvr oenstar ith freig urrenc and mustecang it fr mestc c

11、urrenc beforethey can uy tedesic assets. T echag caes suppl oforegn urrency. Slesof oenfanil asets tatthcountry resients hadpriousl acquird， ad orrig fro orinrs b this contry resntsae ohr formso capita nflo that cancete supyo foregncrency.4.ThU.S fr obtainsa quotatiorom i ban ote spot xchangerte for

12、bng en wit dolls. f the rae iacceptabl， fr itrcs it banktht itwastouse dollars froits dollar ceking accout tbuy1 mllion yatthis ot exhange rae.t alo instructsits bank to endtnto th an account f te pae rm To carr ot his instrutio， th U. bak istrc its cresponet ban i Japanto tke1 mlonefom its acount a

13、thecorrespondentbanand trasfer the en ote bnaout ofthe paese firm. (TheUS. bakuld asouseyena its own rn fi has a ranch iJapan.)6.Thtrder woul seek out te best quted pot atefobuyg eurswth dolrs，eithrtrougdirect ontact wthtraers ter bnks r ysing heseves of a foeignxchange brokr. he tradr would se hbes

14、t raetobu ur sot. metime in e nexhur r so (or,tyily a eastbte ed of h a),the trerwllentertintebank marketagain,t obtainh es qutd st rate fo selling eo fordollas. h tdr illusethe est spot rat to sel her reouslycqueder. If tesot aue f th euro ha rien rigthis sorttme, thetader mkes aprft.8. a.The cross

15、 rate btween h yenand the kone oo hig(te yenvlu o h kroe isto ih)rltv to te dolar-fregn currncy echag rts. Tus, i profitabletriagua rbrage， yowat o sellronet te high ros rate The arbitge wl b: Use dllarso buy koner t $020/roe, us tse rer to uy yen at 25 yen/kroe, and u te yeto buy dlars at 0.01yen F

16、or eachdollar htyousel initil, n oba 5 koner, these 5 kroneran obtain 5 en, n the 5yen an btin $1.2. Th arbitae roft for eacdllarishrefore 25 ents. b.Seingkoner o by yen puts downward presueonthe cros rte (te yn prce f krne). hvlue of tecss rate ust all to 0 （=.0/0.01) n/kroneto elmiate teoprtnyf tr

17、ianular arbirge， ssn that he olarexchangeaarenchged.10.Th inceasein supply of Sissfcs puts downwad essr on the exchnge-rat value ($/F)f heac. Tonetr authiesusinereeto efen theixd exchang ate b buying Fr and sellig dolls .he increas in supl o fancs puts wardpressue on th exchange-ratevalue($/SFr) of

18、thfrac Temonetary authoiis utinere to fendteixeexchaget by buig Fr nd slin dllars. .The inras iuppyof fracs ps doward ressure n teechangerte aue ($/SFr) of te r. Temnetary uthorite must intervene to defend tiedexchanerate y buyingFr nseling dllar. d.The drase iemandor fras uts ownad resur on exchan-

19、rt vae （$/SF)fte ranc The montay uthoriismst itere defend he fixe echane rat uyg Fr an selig ollars.Chape42.Youll dat fou maketrates: Teurrennts ra (or yil) on bonds ssued by the .S. governenhtatuein oneyr, th crrntnteres a (oreld) n bndssedbyhBris gornmet tha mare i one yer, th cre sot excane rate

20、bewn the olla and poud, andthe rrentoeyar forwarxchange rtebwee te dolar ndpound. othe raes rsult n a coved intees difeentialtht is vey clos o zero？4. a.The .S. firm hs n asse psition n yeihas a long potion nye To hdge itsexposre o exchage rate rsk, hermshould ener int a orward excagecontrac nowin w

21、ich the firm commits tosell ynad recive dola at the currenforward ratTeontractamonts eto se 1 millon ye nd rece $9,00， boh in0dys. b.Thstudent as anaset pstio in en long pitn i ye. To hedge th exosur t xchane rt isk, th stdent should ener ito forard ecan ontrac now i which thesdent cmmits to ellye n

22、d eceivedlar athecrrent forward rte. he ontrctmounts areo sell 0 milionye nd eceve$90,000,bth n das. c.The US. firm as an laity posion inyna ort pstion in yen o hedg its exosue oxchnge rae risk, thefir shouleter nto a fordexcha cntrcto in whichthe frm ommts o se oars and receie yna teurentorward ate

23、. Te otrt aonts aeto sel $90,000 andecee 10llyen,oth in 0 dy6Relaiv toour epectd spot vae ofh euro i 0 ays (.2/euro), hecurren frward rat f th ero(1.18/euro） isowthe orard valotheeuro is reaively Usg pricpe ofbuy ow,el hig, oucn peulte y ntrng inta orwa ntra now to buy eur at $.18/euro.I yourcoect i

24、nyur ecaion,then in 0 daysyou il be able tomediael resll t es for $1.22/eur, kein prof of $0.0 for ach urothat youbought owd f many peopl culate n swy, te sive urchass nw f eus frwar （ineasghdmand fr euos forard)wll nto driveup the foward aue of he euo， oard a rent forward rt o $1.22/euro a.TheSwiss

25、franis at a forr preium.ts curen forward vae ($0505Fr)s greter than is cur pot valu($.50SFr) .The cernret ifferntl in favo f Swtzerlads (（1 + 0.05)(00) / 0.50） - ( .01) = 0.0.（Nt that theinteresrate us st matc t tie erod ofte nestmnt)heres a coered interest differential o05 or 30 da (6 percenaan nnu

26、al te). Th .S.inestorcn make a iher retur, cover ginstexhage re risk, by ivesting in SF-deninaeonds, spresmablythinvetshouldethis overedinvestent Althugh he nerst raton Fr-denminate bods isower a e inteestrate llar-dnnated bonds,he frwrdrmi o the fracis lager than tisdffeece， sthat th coved inestmen

27、t is a ood ide c.The acof ded for dollar-denoinatedbons(or the suply ftese odsas ivestrs sell em in order ohitoSF-domnted bnds) uts dwnward peseo prices of U.Sbondsupw pressureonU.S. ers rtesThe xtra demandforthe fn i h po echane markt （asvtors uySr in rdetouy r-einated bonds) putsuwad resure o the

28、spot exchage rte. Theetr demand for Freomiated nd pu upwadpressreonhe prics f wis ondsownwrpsur on ws interestrats. Theexta supl of frncs in the fwa market(a US. invss cvertheirSFr investents bck io dollars) puts downwrd resureon te orwad chage rte. If te lyrt that canges s he forwd excangerae， thi

29、at musfall to bout$.505/S. ith thisforwraean the othernitia raes, te covred interstdifeetiais ce t ro.10.Intestinovered interet pariy， alof the ineret rates and exchng rtes ht re neded tocacatethecvered intes dfeentialare rates tht an bseved ie bndan rein exane maet.Dtermii wether te oed ineret diff

30、rnialis o zer (coed inrestparity）ithen traihtfrar （lthoughsomeore subtleisses rgarin timing of rnscns maylo ee to addesd).In orde ost uncovred itres pariy, we need o nw otony hree raestwo interstrates and the currensot xchange raethat canbe servedn the make， ut also on atte expcedfure spot xchnge ra

31、tetha i notbservd any market. Th tster then nees away t fidout abot nvstors execttins. Oe way iso ask hem， sing a survy,but they may no ay exactl hat they rell hink. Another wa i to exami he actual ucoveeintret dffreti fereknwh the ftur pot exhge rat cually urnsu tb,an se whete thatistical hactersti

32、 o t actualncovred diferentia re cnstnt with nepectducvered differtal of about zero （uncovered itest ariy）.Chater 5 a.The eur s exped appeae aanannual rte o approimtel (1.00 -1.000)/1.00)(36010)00 = .Te exectd uvered ieret differil s aproxiatey3% + 1%4% = 0, s ucvered interst parity hols （rmatey). I

33、f the interest r on 180-day lardenoite bonddeclne to 3%, hen the sotexchan rate ilklytoinreaseteeuo ill apprcite, thdollar priate.At te initial uent pot exchgerte,henitial exected futueot exchne rae, an the iital uorest rat, thexcted unovered interest ifferni shiftsin favof investingin er-enoinated

34、bons (he peceuncoveredifereil is ow osiive， %+ 3= 1%， aving uncovered ivestnt in euo-nominatdbondshe icreaedmn foruros inthe pot exchange market ends toappreciate the euro. f th uro interest rate d the xptedfuture ot exchanerae remin unchage, hnthe uren so rate mus chae immediely t b 1.005/eur, t re

35、tih novred intrst pariy Wen the rre spot teumps to ths aue,tees excangerate aluis nt expected ohang nvaue subequenty durg henex 180 day. The llar has deprecteimmediate， and th ovred diffretl hen again is r ( + 0% -3% =0)4. aFruncovred nerestarityto hld， investors st exect thtthe ateof chanen thspoch

36、ng-rate vle of ye equas he interes raedifrentia，whichis zo. Inestors must expect thatthe furespt value is e saeas teurret so val， .01/. b.I stor expet ht thexhnge rae will b $0.09yen,hen theyexpcteye t depciate from ts iitia sot value uringt next 90 ay Gie tether rates, nvtors ted t hif their inestm

37、ens towad dlardenomind inesnts.The xtr s of yen （anddemanddollas) nte otxchang market resultsin aderae n he rrentpot val othe yen (thdola appcte）. The hift t ectingthat the yen illdepecate (tedol appeie) smei uringthe n 90daysendstcause th yeto depecit(th olar to appreiat）mmeiately in hcurrnt spotma

38、ret6.Thaw ofone pre wil hold bettr r ol ld can etraded silyso ht ay rice diffence wouleao artrage that would endt pu gl pres(statdia omon cuencby oveting rices using mr ecage rats) ack close tquaity BigMacs canbe arbirge. Ifpr dfreesest， te is o rtra resue， s te price dffence an prsisTheprice o BigM

39、cs (staed ina commocurrency) vary ideyarou wold.8.Acring to PPP， he exchnge rate vale ofh M (eativeto te llar）hs risen since theal 190s ecuseGrany hasexeieced lss nflaio hn hs theUnitd Stateste rodut price evl has sen ls i Germany sce the aly 170s han it as ri inthe Uite Sttes.Accrdng the moetaryapp

40、roac,the rman prilel hasnot risen a muchecaus th German monyspplhas iceased ss hatheonysupply ha creasi the Unied State,reative t th grwh ates of eal otic produtin in h two cntres. Th ritispoun i theopposie caseore inltin in Britin than in th Unitd Stas,and hher mn growth Britain. aBecaus the roth t

41、e o th dostic monesupply(s） two ertage pntshih hn iwas previusl，e mnetarapproach inicates tateexhngerte value (e） oftheoregn urrencywill igher tha i othewse wulbethat is， echange re vae of the ounrys curenc wil e lower Speciically,theoreinuency illapreite b twopercentage oins more year, or depreciae

42、 b tw peceage poitsless.Tt is， the domsticurrenywil dereciate by twperentage pints moerer, or appreciate two perentge poins less. be faster grth of t cntrysmoneysuplyeventualy ledsto a faser rte of flaio of h omesti rilevl （P).Specifically, theinflarae il ewo ercntag points ier tan i thrwise wou e.c

43、corigtorelatie PPP, afaster te of ncreas in the mic prce vel (）ledto a ig re of pciaton e oreign currny.12 Forthe Uned Stes i 975, 20,0 =k0000,or k = 25.orPgelovia in 175,10,00 = k100200,r = 0.5. b.For te United ttes, t quanty hoof money ih a cotant mean hat the qtiy eqatio wihk 0.5 huld hold i ： 6,

44、000= 0.5260,000 t oe. ecuse th quantity equion holds froth years wth t sam k, hecangein thepce lv fro 975 to i cnsistnt with theqantiy thoryo oney ha cotant . Similarly, frgela， the quatit eqatn wth k 0. sholholdfor ,and t does(58,500 = 0.0300）.1 a.The igtenin typclly leads toanmmediaence n the coun

45、rys ites ates.In addti, he tigningroably lsoreslt in nvess pectg that the chne-rate vaue o the contrys cuency is kelyto be hier n the fture. The higher expected echange-ateuefor the eny isbase on he xetation tha hontrys prie levelwll e lwer in he utue, and PPP indistht thecurrncywl thn e srnger. For

46、 boho the easns,intrnaional nvesorswillshift tward invsgintscoutys bon h inrase in dand fr the cuntys currenyn te spo exchang met causes the current ecage-ratalueof th currecy tocee Te rncya areciate t ecue the curentexhgat must versootits expectefuture sptalue.Uncovee intest pit isreestablished wit

47、h a ighr interesrae nd a ubsquetxpcte epciation of the currnc. bIf everti else i rthe ed， thexchange ate(t ometic curreny priceof foreig crren)is ielyt decrasquiky b a arge ount.Atehis jump, the xhange rte may teincrese gradualy tward its log-rn vluete value ctent with PP inte lg un.Chpter 62We ofen

48、 us te trm pegge echange rate to eer t a fixedexngerate, becafxedrtes generall are ot ixed freer n adjustblepeg is n exchg rat polcyin wh the xd echange r valo currenc cn be changdfromtime toime, ut sually ii chagedratherseldm (for itnc, o mor han oc very sever years). A crawlin pegsanx rae poli i w

49、hich thefixd exchange rte vale ofa curency is changed fe(rntnce, eeyor ontly), me accrdigto indiators such s he differencen flation rates.4Disagre If a countrys exectedto impose exchane conrols， hic usuall make itre dffiult move fundsout of the cuntry n theuture，nvetors ae likelyt ry to sft fnd out o te untry ow efre he onrolsare iposd. Te incraseinspply domsic urnc no t