ECON 4131, International Finance, Spring 2002, Exam 2 Essays -- UMN Mi

Midterm ExamInternational FinanceApril 7, 2004 manage all questions in examination booklets 1. (15 points) Define the following a) The spot rallying rateb) The forward exchange ratec) A capital accountancy surplusd) Currency depreciatione) Arbitrage 2. (10 points)Briefly discuss the crucial features of forward contracts, currency futures, and currency options. 3. (15 points) Use the BOP accounts guide on the last page of this exam to indicate where each of the following minutes should be recorded in the U.S. balance of payments (e.g. i3, e2, etc.). Bear in intellect that each transaction should generate a capital account and a current account entry. a) A Canadian firm buys a $75 million jet from the American company Boeing, which it pays for with a check displace on Banc du Quebec b) Cargill (out of Mpls.) buys $10m. of Canadian wheat, which it pays for with a check drawn on copulate Cities Federal c) An American...