BUS FPX 4070 Assessment 10 Managing Global Financial Issues

Student Name

Capella University

BUS-FPX4070 Foundations in Finance

Prof. Name

Date

Problem 1: Currency Appreciation

Initially, if 1 Euro could be purchased in the foreign exchange market for $0.25. If the Euro appreciated by 10 percent tomorrow against the dollar, the calculation for determining how many Euros a dollar would buy tomorrow is as follows:

$0.25\times (1+0.10)=0.25\times 1.10=0.275$

Therefore, tomorrow, 1 dollar would buy (0.275) Euros.

Problem 2: Cross Rates

Assuming the exchange rate between the US dollar and the Indian Rupee is 60 Rupees = $1, and the exchange rate between the dollar and the British pound is 1 Pound = $1.5. We can calculate the exchange rate between the Rupee and the pound as follows:

60 Rs (Rupee)​×1.5 USD1 Pound​=1.5 USD60 Rs (Rupee)×1.5 USD​=90 Rs (Rupee)=1 Pound

Therefore, the exchange rate between the Rupee and the pound is (90) Rupees = (1) Pound.

References

Brigham, E. F., & Houston, J. F. (2019). Fundamentals of Financial Management. Cengage Learning.

BUS FPX 4070 Assessment 10 Managing Global Financial Issues