Please read the data definitions in the spreadsheet. You may want to compute means, medians,and standard deviations of the data you produce. For this exercise, we will mainly work in logged rates.(https://goo.gl/Dso1ix)
Answer the following questions in 5 pages or less, plus supporting exhibits if
2 Case Study Questions
1. What is the quoted currency?
2. What does one learn from the data in column I about the JPY vs. the USD over this time period?
3. In column K, Compute an estimate of the real 90 Day Euro Yen Rate. In column L, Compute an estimate of the real 90 Day Euro Dollar Rate. In column M, compute the difference in these real rate estimates (Japan minus US). Describe what you learn from these data, and what they imply for the borrowing program at BID.
4. Discuss the relationship between inflation and interest rates in each currency.
5. In column N, compute the natural logarithm of the spot exchange rate. In column O, compute the natural logarithm of the 3 month forward exchange rate. In Column P, compute the difference between the natural logarithm of the 3 month forward exchange rate and the natural logarithm of the realized spot exchange rate ln(Et+3), where Et+3 refers to the spot rate 3 months ahead. What do you learn from these data?
6. In column Q, compute the difference between the 3 month nominal interest rates in Japan and the US (Japan minus US). In column R, compute the difference between column Q, and the quarterly forward premium in column I. This is (R JPY−RUSD)−ln(F/E). What do you learn from these data?
7. In column S, compute the difference between (Japanese quarterly inflation US quarterly inflation) and (ln(Et+3)−ln(Et)). What do you learn from these data?
8. Compute the following: 3 month JPY interest rate−3 month dollar interest rate+ln(Et)−ln(Et+3). This is equivalent to (RJPY−RUSD)−ln(Et+3/Et). What do you learn from these data?
9. How should BID analyze its effective borrowing costs? Under what circumstances should BID expect to prefer borrowing in one currency rather than the other? If it were issuing the note now (at the end of the data update), what would you recommend it to do?
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more