Preparation for Test #2
Some comments
There are 20 multiple choice questions and your choice of 2 out of 3 short answer problems.
For chapter 13, study pages 393-409. (Stop at "Interaction of Exchange Rate Determinants).
Relevant end-of-chapter problems for chapter 13 are: 1, 2, 3, 4, 7 (except f and g), 11, 12, 13.
I'm not out to give you a hard time on futures and options or covered interest arbitrage. You do have some problems on these topics but in my opinion, they do not require the technical analysis you may come to expect given the last homework.
On covered interest arbitrage: Yes, know the formula for the relationship between the interest-rate differentials and forward premiums (discounts). Caution: be sure to keep track of which direction an interest rate differential favors (one country v. another) and how the exchange rate is expressed (e.g., $/£ or £/$). This totally calls for a "trick" question. ;-)
It looks like there are six PPP-related m.c. questions. I think the concept is rather straight forward. Also since everyone in class was there on Tuesday this should be fair and fresh for all of you!
Sorry, I'm unable to supply sample multiple choice problems at this time. (An "old" test that I would have used was corrupted and I can't recover it. I'd have trouble making essentially two tests.)
I should be online later if you have any questions.
There are 20 multiple choice questions and your choice of 2 out of 3 short answer problems.
For chapter 13, study pages 393-409. (Stop at "Interaction of Exchange Rate Determinants).
Relevant end-of-chapter problems for chapter 13 are: 1, 2, 3, 4, 7 (except f and g), 11, 12, 13.
I'm not out to give you a hard time on futures and options or covered interest arbitrage. You do have some problems on these topics but in my opinion, they do not require the technical analysis you may come to expect given the last homework.
On covered interest arbitrage: Yes, know the formula for the relationship between the interest-rate differentials and forward premiums (discounts). Caution: be sure to keep track of which direction an interest rate differential favors (one country v. another) and how the exchange rate is expressed (e.g., $/£ or £/$). This totally calls for a "trick" question. ;-)
It looks like there are six PPP-related m.c. questions. I think the concept is rather straight forward. Also since everyone in class was there on Tuesday this should be fair and fresh for all of you!
Sorry, I'm unable to supply sample multiple choice problems at this time. (An "old" test that I would have used was corrupted and I can't recover it. I'd have trouble making essentially two tests.)
I should be online later if you have any questions.
posted by Atomic Kid at 4:20 PM
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