BUS FPX 4070 Assessment 10 Managing Global Financial Issues

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

In the foreign exchange market, initially, 1 Euro can be purchased for $0.25. If the Euro appreciates by 10 percent against the dollar, we can calculate how many Euros 1 dollar would buy the following day. The calculation is as follows:

[ 0.25 \times (1 + 0.10) = 0.25 \times 1.10 = 0.275 ]

Thus, tomorrow, 1 dollar would buy 0.275 Euros.

Problem 2: Cross Rates

To determine the exchange rate between the Indian Rupee and the British Pound, we need to use the given exchange rates. The exchange rate between the US dollar and the Indian Rupee is 60 Rupees = $1, and the exchange rate between the US dollar and the British Pound is 1 Pound = $1.5. To calculate the cross rate, we perform the following operation:

[ 60 \, \text{Rs} \, \left( \frac{1 \, \text{USD}}{1} \right) \times \frac{1 \, \text{Pound}}{1.5 \, \text{USD}} = 90 \, \text{Rs} = 1 \, \text{Pound} ]

Therefore, the exchange rate between the Indian Rupee and the British Pound is 90 Rupees = 1 Pound.

Table: Exchange Rate Calculation

References

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

BUS FPX 4070 Assessment 10 Managing Global Financial Issues.