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Money Corp. frequently uses a forward hedge to hedge its Malaysian ringgit (MYR) receivables. For the next month, Money has identified its net exposure to the ringgit as being MYR1,500,000. The 30-day forward rate is $.23. Furthermore, Money’s financial center has indicated that the possible values of the Malaysian ringgit at the end of next month are $.20 and $.25, with probabilities of .30 and .70, respectively. Based on this information, the revenue from hedging minus the revenue from not hedging receivables is____.

An advantage of freely floating exchange rates is that a country with floating exchange rates is more insulated from unemployment problems in other countries.

The inflation rate in the U.S. is 3%, while the inflation rate in Japan is 10%. The current exchange rate for the Japanese yen (¥) is $0.0075. After supply and demand for the Japanese yen has adjusted in the manner suggested by purchasing power parity, the new exchange rate for the yen will be:

The FOMC finally moved to ________ on January 25, 2012, when it issued its “Statement on Long-Run Goals and Monetary Policy Strategy.”

The primary indicator of the Fed’s stance on monetary policy is

Assume that Kramer Co. will receive SF800,000 in 90 days. Today’s spot rate of the Swiss franc is $.62, and the 90-day forward rate is $.645. Kramer has developed the following probability distribution for the spot rate in 90 days:  Possible Spot Rate   in 90 Days Probability $.61 10% $.63 20% $.64 40% $.65 30%  The probability that the forward hedge will result in more dollars received than not hedging is:

When currency options are traded over-the-counter and not standardized, there is ____ liquidity and a ____ bid/ask spread.

The premium on a pound put option is $.03 per unit. The exercise price is $1.66. The break-even point is ____ for the buyer of the put, and ____ for the seller of the put. (Assume zero transactions costs and that the buyer and seller of the put option are speculators.)

Which of the following is an example of economic exposure but not an example of transaction exposure?

If the Fed expects currency holdings to fall, it conducts open market ________ to offset the expected ________ in reserves.