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

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