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Suppose DeGraw Corporation, a U.S. exporter, sold a solar
heating station to a Japanese customer at a price of 143.5 million yen,
when the exchange rate was 140 yen per dollar. In order to close the
sale, DeGraw agreed to make the bill payable in yen, thus agreeing to
take some exchange rate risk for the transaction. The terms were net 6
months. If the yen fell against the dollar such that one dollar would buy
154.4 yen when the invoice was paid, what dollar amount would
DeGraw actually receive after it exchanged yen for U.S. dollars?
Question 2
Suppose 144 yen could be purchased in the foreign exchange
market for one U.S. dollar today. If the yen depreciates by 8.0%
tomorrow, how many yen could one U.S. dollar buy tomorrow?
Question 3
Suppose one British pound can purchase 1.82 U.S. dollars today
in the foreign exchange market, and currency forecasters predict that the
U.S. dollar will depreciate by 12.0% against the pound over the next 30
days. How many dollars will a pound buy in 30 days?
Answer