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Homework answers / question archive / 1) The FX dealer has two quotes

1) The FX dealer has two quotes

Finance

1) The FX dealer has two quotes. The exchange rate between Sri Lankan Rupee and the Australian dollar is Rs.120 / A$. The exchange rate between Myanmar Kyat and the Australian dollar is MMK895 / A$. Assume that the Australian dollar is the home currency. What is the exchange rate between the two foreign currencies?

 

A.

Rs. 7.458 / MMK.
 

B.

Rs. 7.845 / MMK.
 

C.

Rs. 0.134 / MMK.
 

D.

Rs. 0.127 / MMK.
 

E.

none of the above.

 

2) The interest rate in the Sri Lanka is 12.5%. The interest rate in the Australia is 1.5%. The spot rate for the Sri Lankan Rupee is A$0.0082. According to the international Fisher effect (IFE), the Sri Lankan Rupee should adjust to a new level of:

 

A.

A$0.0074.
 

B.

A$0.0083.
 

C.

A$0.0092.
 

D.

A$0.0091.
 

E.

A$0.0082.

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