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

Midterm ExamInternational FinanceApril 7, 2004 Answer all questions in trial booklets 1. (15 points) Define the following a) The spot exchange rateb) The forward exchange ratec) A capital broadsheet surplusd) Currency depreciatione) merchandise 2. (10 points)Briefly discuss the essential 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 to each one of the following transactions should be recorded 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 jet from the American company Boeing, which it pays for with a check wasted 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 American...