Posted: September 29th, 2022

If there is a downward shift in the demand for dollars

If there is a downward shift in the demand for dollars because of increased use of credit cards, what is the effect on the exchange rate?A.) If an investor were able to predict that a country’s currency will appreciate in the future because of a slower inflation rate in that country than in others, does this mean the investor can necessarily earn a higher return by holding that currency?B.) what if the investor were able to predict that a currency will appreciate in the future because it has already overshot (downward) its long-run equilibrium?Are the following three statements true or false?If a country has a high interest rate, then its assets will be attractive to hold and so the value of the currency will be high,If a country has a high interest rate, investors must expect that its currency will lose value in the future.If investors expect that a currency will lose value in the future, the they will have a low demand for it and it will have a low value today,How do statements ii and iii together appear to contradict statement i? Can you reconcile the three statement with each other? (Hint: it might help to distinguish why the interest rate is high) Chapter 28: problem 1 and 2 on page 621.You are the treasurer of a US company that holds open positions (working balances or accounts payable) in foreign currencies. Your bank levies a small but appreciable charge for hedging these positions in the forward market. If you believe that foreign exchange market is efficient, and your company is neutral about risks, will you hedge? What if your company is risk averse? What if your company also has obligations in foreign currencies (bills for imported inputs or employees ‘wages at foreign subsidiaries)? What if you think that the market sometimes is a poor forecaster of future exchange rates?If the dollar is selling at a forward discount of 4 percent per annum and you think the dollar is going to depreciate at 2 percent over the next year, should you “go long” in dollars, or “sell the dollar short:? (Assume your risk is neutral.)

Tags: Ace My Homework: Essay Help, Assignment Help: USA's #1 Online Assignment Writing Service, Do My Assignment for Me Online - Write Academic Papers, Reliable Online Homework Help For You