# Finance for Business, Problems 19-1,19-2,19-3

Topics: United States dollar, ISO 4217, Currency Pages: 2 (477 words) Published: February 12, 2012
19–1. (Converting currencies) An American business needs to pay (a) 10,000 Canadian dollars,
(b) 2 million yen, and
What are the dollar payments to the respective countries?
U.S dollar payment = 10,000 Canadian \$ x .8437 = \$8,437
In order to buy 10,000 Canadian dollars, the American business needs \$8,299, given that the exchange rate is \$0.8437 (b) Japanese yen:
U.S. dollar payment = 2,000,000 yen x .004684 = \$9,368
In order to buy 2 million yen, the American business needs \$9,368, given the exchange rate is .004684. (c) Swiss francs:
U.S. dollar payment = 50,000 Swiss francs x .5139 = \$25,695
In order to buy 50,000 Swiss francs, the American business needs \$25,695, given that the exchange rate is .5139

19–2. (Converting currencies) An American business pays \$10,000, \$15,000, and \$20,000 to suppliers in Japan, Switzerland, and Canada, respectively. How much, in local currencies, do the suppliers receive? (a) Japan suppliers:

Indirect Quote = 1/.004684 = 213.4927 (yen / U.S \$)
Foreign currency amount = U.S. \$10,000 x 213.4927 = 2,134,927 Yen If the American business pays \$10,000, the suppliers in Japan will receive 2,134,927 Japanese yen. (b) Swiss suppliers:
Indirect quote = 1/.5139 = 1.9459 (Swiss franc/U.S \$)
Foreign currency amount = U.S. \$15,000 x 1.9459 = 29,188.5 SFr If the American business pays \$15,000, the suppliers in Switzerland will receive 29,188.5 Swiss Francs. (c) Canadian suppliers:
Indirect quote = 1/.8437 = 1.1856 (Canadian dollar / U.S. \$) Foreign currency amount = U.S. \$20,000 x 1.1856 = C\$23,712

19–3. (Indirect quotes) Compute the indirect quote for the spot and forward Canadian dollar, yen, and Swiss franc contracts. (a) Canadian rates:
Indirect quote (spot) = 1/.8437 = 1.1853
Indirect quote (30-day)= 1/.8417 = 1.1881
Indirect quote (90-day)...