ECOS3029: Weeks 5 Tutorial al Exercises
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ECOS3029: Weeks 5 Tutorial Exercises
1) If the spot exchange rate SAUD_CNY = 0.2119, what is the spot exchange rate S CNY_AUD?
2) If the spot exchange rate SAUD_USD = 1.371, and the spot exchange rate SNZD_USD = 1.430, what is the spot exchange rate SAUD_NZD?
3) If the spot exchange rate SAUD_CAD = 1.076, and the spot exchange rate S CAD_GBP = 1.736, what is the spot exchange rate SAUD_GBP?
4) Assume that you are an investor with 1,000 EUR in a trading account and observe the
following spot exchange rates: S USD_CHF = 1.094, SCHF_EUR = 1.086, S USD_EUR = 1.171. Assuming that there are no transaction costs, what trading/investment strategy would you adopt?
5) If the spot exchange rate was SAUD_USD = 1.371, but the AUD suddenly depreciates so that each AUD is worth 10% fewer USD, what is the new value of the spot exchange rate
SAUD_USD?
6) Assume that consumers consume only 2 items: Rent; Food. In Germany, rent for 1 year is
EUR 10,000 and food for 1 year is EUR 7,500. In Australia, rent for 1 year is AUD 20,000 and food for 1 year is AUD 7,500. If the spot exchange rate is SAUD_EUR = 1.616, what is the real exchange rate between Australia and Germany (treat Australia as the domestic country)? At value of the nominal exchange rate SAUD_EUR would Absolute PPP hold?
2023-09-15