Question

1. At the open in NYC today the e¥/$ exchange rate was 107, at close it was 108. You have to pay your Japanese supplier ¥1,397,000,000.

If you traded at the opening, how much would you have pay (in $)?	13,056,074.77
If you traded at the close, how much would have to pay (in $)?	12,935,185.19
Should you trade at the open or close? (Circle the correct answer)	Open      Close
How much money do you save the company by choosing the correct trade	-120,889.58
Did the $ appreciate or depreciate during the day? (Circle the correct answer)	Appreciate       Depreciate
By what % did the $ change? %∆ =

Please answer the last two parts.

Answer 1

a) At open we have to pay the Japanese supplier in dollars = ¥ 1,397,000,000 / 107 = $13056074.77

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b) At close we have to pay the Japanese supplier in dollars = ¥ 1,397,000,000 / 108 = $12935185.19

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c) Since we have to pay the supplier, we will the one that is lesser, i.e. we will pay the supplier at the closing exchange rate of 108. We will pay $12935185.19. Close

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d) Money saved = Close trade payment - open trade payment

Money saved = $12935185.19 - $13056074.77 = - 120889.581

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e) During the day, the dollar has depreciated. We are now buying one yen for 108 dollars instaed of 107 dollars. So dollar has depreciated. The change = (108-107)/107% = 0.94

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