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Sarakose Co. is a U.S. company with sales to Canada amounting to C$5 million. Its cost of materials attributable to the purchase of Canadian goods is C$7 million. Its interest expense on Canadian loans is C$5 million. The dollar value of Sarakose’s “earnings before interest and taxes” would ____ if the Canadian dollar appreciates; the dollar value of its cash flows would ____ if the Canadian dollar appreciates.

Assume that a U.S. firm can invest funds for one year in the U.S. at 12% or invest funds in Mexico at 14%. The spot rate of the peso is $.10 while the one-year forward rate of the peso is $.10. If U.S. firms attempt to use covered interest arbitrage, what forces should occur? 

Currency devaluation can boost a country’s exports, but currency revaluation can increase foreign competition.

A weaker dollar places ____ pressure on U.S. inflation, which in turn places ____ pressure on U.S. interest rates, which places ____ pressure on U.S. bond prices.

Assume that the dollar has been consistently depreciating over a long period. The Fed decides to counteract this movement by intervening in the foreign exchange market using sterilized intervention. The Fed would

Assume that the U.S. one-year interest rate is 5% and the one-year interest rate on euros is 8%. You have $100,000 to invest and you believe that the international Fisher effect (IFE) holds. The euro’s spot exchange rate is $1.40. What will be the expected yield on your investment if you invest in euros?

If the European Central Bank decides to weaken the euro utilizing unsterilized intervention, it should be aware that this action will increase the money supply, which may increase inflation.

What is the limiting reactant and how many grams of C6H12O6(g) (molar mass = 180.16 g/mol) can be produced when you react 256 g of CO2(g) (molar mass = 44.01 g/mol) with 88.0 g of H2O(g) (molar mass = 18.02 g/mol)? 6CO2(g) + 6H2O(g) → C6H12O6(s) + 6O2(g)

Assume the U.S. interest rate is 2% higher than the Swiss rate, and the forward rate of the Swiss franc has a 4% premium. Given this information:

If the Fed desires to weaken the dollar without affecting the dollar money supply, it should: