FIN 3005 FIN3005 Week 8 Individual Work 1 (Everest University)

FIN 3005 FIN3005 Week 8 Individual Work 1 (Everest University)

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FIN3005 Week 8 Individual Work 1 (Everest University)

QUESTIONS AND APPLICATIONS

1.  Exchange Rate Systems: Explain the exchange rate system that existed during the 1950s and 1960s. How did the Smithsonian Agreement in 1971 revise it? How does today’s exchange rate system differ?

3.  Impact of Quotas: Assume that European countries impose a quota on goods imported from the United States and that the United States does not plan to retaliate. How could this affect the value of the euro? Explain.

4.  Impact of Capital Flows: Assume that stocks in the United Kingdom become very attractive to U.S. investors. How could this affect the value of the British pound? Explain.

5.  Impact of Inflation: Assume that Mexico suddenly experiences high and unexpected inflation. How could this affect the value of the Mexican peso according to purchasing power parity (PPP) theory?


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