Optional International Finance Exam

February 2012 HE-61 Optional Midterm Exam

Part A)

1)The foreign-currency reserve is used just by Danmarks Nationalbank to establish transaction between foreign exchange markets. But in some cases, foreign currency reserve is not be used, i.e. If there is a foreign debt circumstance of central government's. In this condition, reserves must be holded since there are different sources to supply this debt.

2)Actually, the FX reserves can be changed because they are reflected as ongoing interest accrual and value adjustments. There can be loans, which are for short term or long term. This can determine the change.

Also we can say that, there is a increase in the chart 4.1. It is due to provide the maintanance of the stable krone rate. In order to edit and providing equilibrium, FX reserves must be changed in this chart.

FX reserves can be increased thanks to repaying foreign debts without FX reserves. They must not be used and while the debt is being repaid, krone rate must be tried to be stable. This can be beneficial for the 'how the value of the FX reserve can increase while the Central Government is repaying foreign debt?' issue.

3)Gold is holded by the central bank because there is a 'store of value' issue and gold is like currency. Note holders can use and gold is a shape of guarantee to payment. Gold does not devaluate

Gold can be seem as an asset but it can not be used like cash or notes. But thanks not to devaluate gold can be used and holded.

4) Question 4 is on the paper.

Part B)

Problem 3.2: 5,5 is 100% so 3,2-5,5=-2,3 x%

=(-2,3*100)/5,5= 41,8181%

Problem 3.3: 20,67$ = FF310,00 so

310/20,67=14,99 ---1$= FF14,99

Problem 3.15: I would choose Saigon Airport exchange bureau rate because I have to think for long term and long run plans. Comission rate is 2%

Problem 4.1:

We can see that there is increasing just in 2001. The table is from 1998 to 2006. In 2004 there is the biggest difference between...