International Finance (600545)

Custom Research Paper Writing Service 

International Finance (600545)

Don't use plagiarized sources. Get Your Custom Essay on
International Finance (600545)
Just from $13/Page
Order Essay

 Mock Exam Paper 


Business School

University of Hull


Duration of Examination: 3 Hours

SECTION A – Answer ANY THREE questions in this section; 


SECTION B – Answer ANY ONE question in this section 

(answer the question in approximately 500 words)


Formulae sheet attached to examination paper.


You should answer all compulsory questions. If you do not attempt to answer a compulsory question you will receive a mark of 0 for that question.

If you have a choice of questions and you answer more than you are asked to, your answers will be marked in the order that the questions appear on the examination question paper. Any additional questions that you attempt will not be marked.


You should cross out any questions which you attempt but do not wish to be marked.


Please write down the number of question you attempt before answering it.




Answer ANY THREE questions in this section


Question 1


The direct quote for the spot exchange rate and the one year forward exchange rate for the euro against sterling are quoted in Paris as follows:


S0 = €1.1638/£

F0,360 = €1.1821/£


The interest rate in the UK is 1.2% per annum and the interest rate in the euro area is 3.2% per annum now and they are expected to remain unchanged in the next year.




  • Examine whether arbitrage opportunities exist and if so how these might be exploited.

(8 marks)


  • What would you expect the spot exchange rate to be in one years’ time? If the actual rate in one is 1.1868 does this mean that uncovered interest rate parity holds

(10 marks)


  • In this case is the forward rate a good predictor of the future spot rate? Explain whether you would expect this to be true ‘on average’.

(7 marks)

(Total 25 marks)


Question 2


The cost of a Big Mac in the United States is $US 4.07. The cost in China is 14.7 Yuan.  Inflation in the United States is expected to be 4% over the year and in China 8%.




  • What would the exchange rate be if Purchasing Power Parity holds for the Big Mac?
    • marks)


  • If the actual exchange rate is 6.45 Yuan / $ by how much is the Yuan under or over valued relative to your answer to (a)?

(12 marks)


  • Explain how “Big Mac PPP” can be used to determine whether a currency is under or overvalued.
    • marks) (Total 25 marks)


Question 3


Neil Green has purchased a call option on Euros for US $0.05 per unit. The strike price is $1.25. Assume there are 67,500 units in a Euro option.



  1. If the spot exchange rate at the time the Euro option is exercised is $1.29 and ignoring the cost of the option, would Neil make a profit and if so how much?
    • marks)
  2. If the cost of the option is included in your calculations, calculate whether Neil will make a profit or loss
    • marks)
  3. What will the spot exchange rate have to be when the option is exercised in order for Neil to be ‘in the money’?

(2 marks)

  1. Briefly discuss the differences between forward/futures and options contracts.

(7 marks)


(Total 25 marks)

Question 4


On May 2nd  2011 a trader enters into one currency futures contract to sell

British pounds at a price of 1.6321 $US / £ on August 1st.  The contract size is £78500.  The initial margin is set at $2000 and the maintenance margin is set at $1350.  The settlement prices for the following five days are found in the table below.

Date Settlement price Daily losses/ gains Cumulative losses/ gains Margin call Margin account balance
May 02, 11 1.6321
May 03, 11 1.6458
May 04. 11 1.6471
May 05, 11 1.6389
May 06, 11 1.6241
May 09, 11 1.6186


  • Calculate the daily losses / gains and the cumulative losses / gains.
    • marks)


  • Calculate the margin call and explain how you have done this.
    • marks)

(c) Calculate the margin account balance and explain how you have done this.

(7 marks)

(Total 25 marks)




Answer ANY ONE question in this section  

(answer the question in approximately 500 words)


Question 5


  • Explain the links between different parity conditions and whether these conditions are consistent.

(15 marks)


  • Why might the violation of some parity conditions be easier to make arbitrage profits from than others?

(10 marks)

(Total 25 marks)


Question 6


How might multinational firms be exposed to foreign exchange transactions risk? Explain how firms might seek to manage this risk.

(25 marks)







Relative PPP


∆𝑆𝑡 = ∆𝑃ℎ,𝑡 − ∆𝑃𝑓,𝑡 = 𝜋ℎ,𝑡 − 𝜋𝑓,𝑡

Covered Interest Rate Parity

Uncovered Interest Rate Parity

International Fisher Effect


𝐸0(∆𝑆1)=𝑟−𝑟𝑓 =𝐸0(𝜋)−𝐸0(𝜋𝑓)




Calculate the price
Make an order in advance and get the best price
Pages (550 words)
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Upload your instructions
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with Home Work Stand
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Computer science
Great individual to work with. Always come through to provide the best services. Thank you.
Customer 452445, June 10th, 2022
Human Resources Management (HRM)
The best writer in his subject of expertise. It is reflected in the quality of the work.
Customer 452445, December 29th, 2021
Criminal law
I got an A. I recommend homeworkstand.
Customer 452445, October 31st, 2021
Social Sciences
Another Perfect paper!
Customer 452445, January 24th, 2022
Helped me beat the deadline. Am grateful.
Customer 452445, November 6th, 2021
It was a very long paper, but she followed all the instructions, and she even finished the paper 3 days before the due date
Customer 452445, June 8th, 2022
Very well written and very impressed with this service!
Customer 452445, June 14th, 2022
Human Resources Management (HRM)
Awesome work! Writer articulates points well which makes it easy to read the essay!
Customer 452445, December 15th, 2021
Human Resources Management (HRM)
Great work. Always deliver before the deadline.
Customer 452445, March 24th, 2022
Business Studies
Great Work. Very Thorough
Customer 452445, January 12th, 2022
Political science
Thorough and great work
Customer 452445, January 10th, 2022
Classic English Literature
Wonderful writer. Pay attention to detail. Does not plagiarize. Always completes work on time!
Customer 452445, March 3rd, 2022
Customer reviews in total
Current satisfaction rate
3 pages
Average paper length
Customers referred by a friend
15% OFF your first order
Use a coupon FIRST15 and enjoy expert help with any task at the most affordable price.
Claim my 15% OFF Order in Chat

Order your essay today and save 15% with the discount code ESSAYHELP