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Module 3 Assessment

Instruction:
A. Answer the following items and submit on or before July 3, 2020.
B. Show your solution to problem solving items. You can write your answer in a sheet of paper, take a photo of it, and upload your answer in
the Activity 3 file. File name should be Module 3_Surname, First Name

BANGKO SENTRAL NG PILIPINAS

FINANCIAL MARKET OPERATIONS SUB-SECTOR
REFERENCE EXCHANGE RATE BULLETIN
June 23, 2020
(Convertible Currencies with BSP)
Country Unit Symbol Euro Equivalent U.S. Dollar Phil. Peso Equivalent
Equivalent
UNITED STATES DOLLAR USD 0.887863 1.000000 50.0690
JAPAN YEN JPY 0.008306 0.009355 0.4684
UNITED KINGDOM POUND GBP 1.107431 1.247300 62.4511
HONGKONG DOLLAR HKD 0.114557 0.129026 6.4602
SWITZERLAND FRANC CHF 0.936861 1.055186 52.8321
CANADA DOLLAR CAD 0.656607 0.739536 37.0278
SINGAPORE DOLLAR SGD 0.637695 0.718236 35.9614
AUSTRALIA DOLLAR AUD 0.613336 0.690800 34.5877
BAHRAIN DINAR BHD 2.354512 2.651887 132.7773
SAUDI ARABIA RIYAL SAR 0.236713 0.266610 13.3489
KUWAIT DINAR KWD 3.25 2.89 163.05
CHINA YUAN CNY 0.125621 0.141487 7.0841
KOREA WON KRW 0.000734 0.000827 0.0414
EUROPEAN MONETARY EURO EUR 1.000000 1.126300 56.3927
UNION
UNITED ARAB EMIRATES DIRHAM AED 0.241740 0.272272 13.6324
THAILAND BAHT THB 0.028632 0.032248 1.6146
INDONESIA RUPIAH IDR 0.000063 0.000071 0.0036
BRUNEI DOLLAR BND 0.635413 0.715666 35.8327
Part 1-Problem Solving
1. Paul is opening an online stationary. Below is a list of some items he wants to sell and the prices he wants to charge for them in Philippine
Pesos. He also wants to show the price in other currencies. Consider the exchange rates above. Then calculate the price of each item in
US dollars, Euro, British Pound, Indian Rupee, Australian Dollar, Canadian Dollar, Singapore Dollar, and Japanese Yen. Also figure out the
cost in each currency. (2 points each)
In Philippine Peso
Pencil 12.00
Pen 35.00
Notebook 65.00
Total Cost 112.00
Example Answer:
Solution
₱1=$0.020 ($1/50.0690) 1. In US Dollars (round of to
2 decimal place)
Pencil $0.24
Pen $0.70
Notebook $1.30
Total Cost $2.24
1. Anya has made a list of items she bought while shopping. She also wants to give the prices in other currencies. Look at the exchange rates
above, and then calculate the price of each item in Philippine Peso, Bahraini Dinar, Kuwaiti Dinar, Chinese Yuan, and Canadian Dollars.
(2points each)

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In US Dollars
Jeans $25
T-Shirt $40
Skirt $28
Socks $30
Total Cost $123

2. If 1 US Dollar is worth .89 Euros, what is the exchange rate for converting Euros to Dollars?
a. 1.25
b. 1.50
c. 0.80
d. 1.13
3. The exchange rate for converting US Dollars to Chinese Yuan is 6.11. How much is 600 US Dollars’ worth in China?
a. 3500 Chinese Yuan
b. 3800 Chinese Yuan
c. 3666 Chinese Yuan
d. 4120 Chinese Yuan
4. Molly is travelling from France to the US. She knows that 1 US dollar is worth 0.80 Euros. How much is 350 Euros worth in US Dollars?
a. 425 US Dollars
b. 437.50 US Dollars
c. 375 US Dollars
d. 280 US Dollars
5. Answer the Following item
Original Exchange Rate Reciprocal Rate Answer
(a) €1=$0.8420 $1=€?
(b) £1=$1.4565 $1=£?
(c) 1 New Zealand Dollar=$0.4250 $1=New Zealand Dollar?
6. Given:
$1 = ¥107.18
£1 = $ 1.2473
A$1 = $0.69
(a) Calculate the cross rate for pounds in yen terms
(b) Calculate the cross rate for Australian dollars in yen terms.
(c) Calculate the cross rate for pounds in Australian dollar terms
7. Calculate the unrealized profit or loss on ₱ 20,000,000 which were purchased at a rate of $1 = ₱47.20 and could be sold at a rate of $1 =
₱50.60.
8. Suppose the exchange rate between British pounds and American dollars is 1.10 dollars per pound. What would a bottle of British ale cost in
America if it costs 1 pound in England?
a. $.90
b. $.91
c. $1.00
d. $1.10
e. $1.11

9. Demand for foreign exchange in America is increased by all of the following except
a. an increase in demand by Americans for imported commodities.
b. an increase in American exports.
c. an increase in the number of Americans travelling abroad.
d. an increase in the desire of Americans to invest abroad.
e. an increase in the profits sent by companies in America to their foreign owners.
10. Purchasing power parity suggests that exchange rates depend on
a. interest rates.
b. inflation rates.
c. capital movements.
d. the business cycle.
e. changes in comparative advantage.
11. Under a floating exchange rate system, if the demand for foreign exchange increases,
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a. the exchange rate depreciates.

b. the country revalues its exchange rate.
c. the government supplies the extra foreign exchange.
d. the government lowers the official price of its currency.
e. None of the above
12. If the exchange rate depreciates, imported goods are for domestic residents, and domestic exports are
for foreign citizens.
a. cheaper; cheaper
b. cheaper; more expensive
c. more expensive; more expensive
d. more expensive; cheaper
13. The main function of foreign exchange market is
a. Save the money of the country
b. Convert the currency of one country into another currency of another country
c. Don’t contribute insurance against foreign exchange risk
d. None of these
14. What is exchange rate?
a. What the market converts one currency into another
b. Which the prices of products are quoted
c. Saving the money of one country
d. The short-term movement of funds from one currency into another.
15. What does PPP means
a. Purchase Products of Prices
b. Purchase Power of Parity
c. Power of Product Parity
d. Price of Product Parity
16. Which of the following raises funds to make development loans to the world’s poorest countries?
a. World Bank
b. International Monetary Fund (IMF)
c. Bank of International Settlements (BIS)
d. International Finance Corporation
17. Among its many functions, the World Bank aids
a. Developing countries by promoting foreign investment
b. Industrialized countries by guaranteeing loans to members
c. All countries by promoting the growth of international trade
d. Member countries by promoting growth of international trade
18. The primary function of the European Monetary System is to
a. Regulate the supply of currency among members of the EC
b. Promote a harmonized monetary policy among members of the EC
c. Integrate currencies of the EC
d. privatize public assets and help in the transition towards capitalism of former East Bloc countries
19. The Bretton Woods conference came about because the post-WWI financial structures failed. Ingredients for stability would be
a. convertible currencies and trade barriers
b. Non-tradable currencies and freer trade.
c. Non-tradable currencies and trade barriers.
d. convertible currencies and freer trade
20. According to the Bretton Woods system of fixed exchange rates, the par value could only be changed on
a. Approval of the BIS and only if the country was suffering from hyperinflation.
b. Approval of the BIS and only if the country was suffering a fundamental disequilibrium of its balance of payments.
c. Approval of the IMF and only if the country was suffering from hyperinflation.
d. Approval of the IMF and only if the country was suffering a fundamental disequilibrium of its balance of payments.
21. The par value system which came about as a result of the Bretton Woods conference fixed the member nations exchange rates against
a. the price of gold.
b. the price of silver.
c. the British Pound.
d. special drawing rights (SDRs)

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Part 2: True/False. If the statement is correct, write true in the space provided; if it is wrong, write false.
_____ 1. In order for an American importer to buy Japanese cars, the importer needs Japanese yen.
_____ 2. The supply of a country’s foreign exchange comes from the demand by foreigners to buy the country’s products.
_____ 3. A fixed exchange rate is one that is fixed by the free interaction of supply and demand for foreign exchange.
_____ 6. The demand curve for foreign exchange shifts out when the price of foreign exchange rises.
_____ 7. A country’s supply curve of foreign exchange shifts out when there is an increase in demand for its exports.
_____ 8. Exports and imports must always be equal.
_____ 9. Capital-importing nations are made worse off by capital flows, while capital-exporting nations are made better off.
_____ 10. Most European nations currently fix their exchange rate to the U.S. dollar.
_____ 11. For most of the thirty years after World War II, the world was generally on a system of floating exchange rates.
_____ 12. Exchange rate movements provide the major equilibrating force with fixed exchange rates.
_____ 13. Devaluation occurs when a country with a fixed exchange rate lowers the price of its currency.
_____ 14. Under the Bretton Woods system, countries made their currencies directly convertible into gold at a set price.
_____ 15. Capital exports from a country are an immediate source of additional foreign exchange.
_____ 16. Capital exports allow capital-importing countries to increase their quantity of capital.
_____ 17. The Bretton Woods system was a system of floating exchange rates.

Part 3: Additional Questions

1. Visit the exchange rate site in the Philippines and look into the two most expensive currencies when converted to Philippine
Peso, why do you think it has the highest value when converted compared to US Dollar and Euro?

2. Why exchange rate does vary daily? What are the factors that relatively affect this change?

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Summer Class 2020