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EXI07SASSN02lawofonepriceexercise

VIEWS: 4 PAGES: 9

  • pg 1
									          Last
Class # above name above
1         Adolfsson, Bjorn E.
2         Chisholm, William J.
3         Ellison, Laurel J.
4         Graham, Thomas A.
5         Hooten, Douglas R.
6         Kelley, John M.
7         Khan, Talal W.
8         Mendrygal, Alexander V.
9         Messner, Murray T.
10        Mills, Carla K.
11        Mitchell, Thomas J.
12        O'Dell, Gary A.
13        Richter, Jason J.
14        Silverman, Connie F.
15        Sutton, R. R.
16        Williams, Anthony D.
                0                      0                        START EACH OF FOLLOWING TABLES WITH $1000 in any o
Class # above       Last name above        wt. to this question YOU MAY MAKE UP TO THREE TRANSACTIONS BUT MUST
                                                   New York       London                  Tokyo
L/$                 pound price of a dollar                           xxxxxxxxxxxxxxxxxxxx
                                                    0.0000 xxxxxxxxxxxxxxxxxxxx
Y/L                 Yen price of a Poundxxxxxxxxxxxxxxxxxxxx 68.5958 xxxxxxxxxxxxxxxxxxxx
$/Y                                                        xxxxxxxxxxxxxxxxxxxx
                    dollar price of yen xxxxxxxxxxxxxxxxxxxx                   #DIV/0!
                                                           Maximum Value after 3 exchanges=

                                                   New York       London                  Tokyo
L/$                 pound price of a dollar                           xxxxxxxxxxxxxxxxxxxx
                                                    0.0000 xxxxxxxxxxxxxxxxxxxx
L/Y                 Pound price of yen xxxxxxxxxxxxxxxxxxxx 68.5958 xxxxxxxxxxxxxxxxxxxx
$/Y                                                        xxxxxxxxxxxxxxxxxxxx
                    dollar price of yen xxxxxxxxxxxxxxxxxxxx                   #DIV/0!
                                                           Maximum Value after 3 exchanges=

                                                   New York       London                  Tokyo
L/$                 pound price of a dollar                             xxxxxxxxxxxxxxxxxxxx
                                                      0.0000 xxxxxxxxxxxxxxxxxxxx
L/Y                 Pound price of yen xxxxxxxxxxxxxxxxxxxx 68.5958 xxxxxxxxxxxxxxxxxxxx
Y/$                                                          xxxxxxxxxxxxxxxxxxxx
                    Yen price of a dollar xxxxxxxxxxxxxxxxxxxx                   #DIV/0!
                                                             Maximum Value after 3 exchanges=


                                                   New York       London                  Tokyo
L/$                 pound price of a dollar           0.0000       0.0000                 0.0000
Y/L                 Yen price of a Pound        #DIV/0!           68.5958        #DIV/0!
$/Y                 dollar price of yen         #DIV/0!         #DIV/0!          #DIV/0!
                                                               Maximum Value after 3 exchanges=

                                                   New York       London                  Tokyo
L/$                 pound price of a dollar           0.0000       0.0000                 0.0000
L/Y                 Pound price of yen          #DIV/0!           68.5958        #DIV/0!
$/Y                 dollar price of yen         #DIV/0!         #DIV/0!          #DIV/0!
                                                               Maximum Value after 3 exchanges=

                                                   New York       London                  Tokyo
L/$                 pound price of a dollar           0.0000       0.0000                 0.0000
L/Y                 Pound price of yen          #DIV/0!           68.5958        #DIV/0!
Y/$                 Yen price of a dollar       #DIV/0!         #DIV/0!          #DIV/0!
                                                               Maximum Value after 3 exchanges=
WING TABLES WITH $1000 in any of the following three markets.
HREE TRANSACTIONS BUT MUST END WITH THE MAXIMUM POSSIBLE NUMBER OF DOLLARS
            show the maximum   For this part of the assignment (first three data
          you can make after   boxes), you must decide what currencies you are
          three exchanges in   going to trade in each city. Suppose you want to
          F7                   trade dollars (which you have) for pounds (which
                               you need). In New York where $ can be exchanged
                               for pounds, you would write down in column M
            show the maximum   "supply" for dollars and "demand" for pounds in the
          you can make after   yellow spaces provided. Feel free to move this
                               information box elsewhere to allow you room to use
          three exchanges in
                               columns G, H, and I
          F13


            show the maximum
          you can make after
          three exchanges in
          F19




            show the maximum
                               For this part of the assignment (last three data boxes), you
          you can make after
                               must decide what cities you are going to trade in as well as
          three exchanges in
                               what currencies you are going to exchange in each city. This
          F26                  must be done in the order in which you are going to make
                               transactions. So if you want to start (exchange market #1) in
                               New York exchanging yen for pounds, you would write down
            show the maximum   in column L "New York" and indicate "yen" (which you have)
          you can make after   in the first row and "pounds" (which you want) in the second
          three exchanges in   row. As indicated in column M the first row indicates you are
          F32                  raising the supply of yen and the second row indicates you
                               are increasing the demand for pounds. You can use any
                               combination of cities that you want including doing all of the
                               transactions within one city. Feel free to move this
            show the maximum
                               information box elsewhere to allow you room to use columns
          you can make after   G, H, and I
          three exchanges in
          F38
                                               Currency   supply or demand?
               Exchange Market      New York   $
                                               pounds
                                    London     pounds
                                               Yen
                                    Tokyo      Yen
                                               $
                                               Currency   supply or demand?
               Exchange Market      New York   $
                                               pounds
                                    London     pounds
                                               Yen
                                    Tokyo      Yen
                                               $
               Exchange Market      New York   $
                                               pounds
                                    London     pounds
                                               Yen
                                    Tokyo      Yen
                                               $
                                                          supply or demand?
               Exchange Market #1                         more supply
                                                          more demand
               Exchange Market #2                         more supply
h city. This
                                                          more demand
arket #1) in Exchange Market #3                           more supply
write down                                                more demand
  you have) Exchange Market #1                            more supply
 he second                                                more demand
 es you are Exchange Market #2                            more supply
                                                          more demand
               Exchange Market #3                         more supply
g all of the                                              more demand
               Exchange Market #1                         more supply
se columns
                                                          more demand
               Exchange Market #2                         more supply
                                                          more demand
               Exchange Market #3                         more supply
                                                          more demand
                          0                          0                       START THE FOLLOWING TABLE WITH
Class # above                 Last name above                               In
                                                         wt. to this question  three transactions trade for the grea
                                                                  Vendor 1            Vendor 2
coffee price of tea           pounds coffee/pounds tea             0.0000               0.0000
coffee price of water         pounds coffee/gallons water     #DIV/0!                   4.7433
tea price of water            pounds tea/gallons water        #DIV/0!             #DIV/0!
                                                                             Maximum
   For this part of the assignment (last three data boxes), you must decide what vendor you are going to use for
   trades as well as what commodities (tea, water, coffee) you are going to exchange with each vendor. This must
   be done in the order in which you are going to make transactions. So if you want to start (barter market #1) with
   Vendor #2 exchanging tea for water, you would write down in column L "Vendor #1" and indicate "tea" (which
   you have) in the first row and "water" (which you want) in the second row. As indicated in column M the first row
   indicates you are raising the supply of tea and the second row indicates you are increasing the demand for
   water. You can use any combination of vendors that you want including doing all of the transactions with one
   vendor.
T THE FOLLOWING TABLE WITH 10 POUNDS OF TEA
 e transactions trade for the greatest possible amount of tea possible. Don't end up with less than 10 pound
                              Vendor 3     show the maximum
                                 0.0000 you can make after                      barter Market #1
                       #DIV/0!          three transactions in
                       #DIV/0!          F7                                      barter Market #2
             Value after 3 barters=
 t vendor you are going to use for                                              barter Market #3
 hange with each vendor. This must
  want to start (barter market #1) with
ndor #1" and indicate "tea" (which
 s indicated in column M the first row
u are increasing the demand for
ng all of the transactions with one
h less than 10 pounds of tea!!!
           Vendor   commodity Supply or Demand
                              more supply
                              more demand
                              more supply
                              more demand
                              more supply
                              more demand
                                  0                           0
                                                                  wt. to this question
                                                                  Investment in U.S.       Investment in Europe
                                                                                  (in $)                (in euros)
"Currency per U.S. $"               Foreign currency/dollar                           1                           1
country interest rate               percentage change/year                          0.5                           1
"U.S. $ equivalent"- 1 year forward Dollar/foreign currency                           1           #DIV/0!
                         ANSWERS                                                 (in $)               (in euros)
Initial $1000 investment
Initial 1000 euro investment
Initial 1000 yen investment
Initial 1000 rupee investment

 Begin with $1000 in row 9, and end up in dollars after using the exhange rate in row 5, interest rate in row 6, and
 forward exchange rate in row 7 to show what happens after one year of investment in each of the four countries
 indicated in columns C, D, E, and F.
 Begin with 1000 euro in row 10, and end up in eurosafter using the exhange rate in row 5, interest rate in row 6, and
 forward exchange rate in row 7 to show what happens after one year of investment in each of the four countries
 indicated in columns C, D, E, and F.
 Begin with 1000 yen in row 11, and end up in yen after using the exhange rate in row 5, interest rate in row 6, and
 forward exchange rate in row 7 to show what happens after one year of investment in each of the four countries
 indicated in columns C, D, E, and F.
 Begin with 1000 rupees in row 12, and up in rupees after using the exhange rate in row 5, interest rate in row 6, and
 forward exchange rate in row 7 to show what happens after one year of investment in each of the four countries
 indicated in columns C, D, E, and F.


  ANSWER the following question: Regardless of what currency you start with you can always make the most money by
  trading currencies with the same country? True or false (erase the wrong answer and explain using your computations
  above):
              Investment in Japan Investment in India
                            (in yen)       (in rupees)
                                   1                 1
                                   1                 1
                       #DIV/0!          #DIV/0!
                           (in yen)      (in rupees)




rate in row 6, and
he four countries

est rate in row 6, and
he four countries

t rate in row 6, and
he four countries

est rate in row 6, and
he four countries



make the most money by
using your computations

								
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