1. The Bangko Sentral ng Pilipinas (BSP) suddenly made a surprise 150 bps cut pushing policy rates down to 0.50% from th
Posted: Wed May 18, 2022 10:46 pm
1. The Bangko Sentral ng Pilipinas (BSP) suddenly made a
surprise 150 bps cut pushing policy rates down to 0.50% from the
current 2.00%. Assuming all else equal, which of the following
scenario for the peso is likely to occur according to the
International Fisher Effect?
a. The PHP depreciates due to the relatively high expected local
inflation.
b. The PHP depreciates due to the decrease in imports and
increase in exports.
c. The PHP depreciates due to the relatively low expected local
inflation.
d. The PHP appreciates due to the increase in imports and
decrease in exports.
2. ASSUMING ALL ELSE EQUAL - The Philippine government and the
Taiwanese government both announced a policy rate hike of 25 bps
and 50 bps, respectively. SOLELY BASED ON THIS INFORMATION, which
of the following will most likely happen?
a. PHP will weaken against USD
b. TWD will weaken against PHP
c. PHP will strengthen against TWD
d. TWD will appreciate against PHP
3. Momo Hirai, CFA is an analyst from a Philippine investment
bank who specializes in government bond trading. The firm has some
excess funds and she is considering to buy a 1-yr treasury bill
which pays a rate of 2.50%. Suppose the expected inflation rate and
BSP policy rate during the said period is 4.00% and 2.00%,
respectively. The real interest rate received on the investment is
closest to ____________.
a. -1.500%
b. 0.500%
c. 1.500%
d. 2.500%
4. Citibank sold a 1-year FX CALL option on USD to a
multinational corporation (MNC) based in the Philippines at a
premium amounting to X at strike/exercise price of Y. Suppose at
the end of one year, USDPHP spot rate is P and USDPHP 1 yr forward
rate is Q, which of the following statements is accurate?
a. At inception, MNC pays Citibank Y for the purchase of the
call option.
b. Citibank receives X when the option matures a year
after.
c. Should MNC exercise the right at maturity, Citibank buys USD
at Y from MNC.
d. Citibank sells USD at Y should the option holder chooses to
exercise the right at maturity.
surprise 150 bps cut pushing policy rates down to 0.50% from the
current 2.00%. Assuming all else equal, which of the following
scenario for the peso is likely to occur according to the
International Fisher Effect?
a. The PHP depreciates due to the relatively high expected local
inflation.
b. The PHP depreciates due to the decrease in imports and
increase in exports.
c. The PHP depreciates due to the relatively low expected local
inflation.
d. The PHP appreciates due to the increase in imports and
decrease in exports.
2. ASSUMING ALL ELSE EQUAL - The Philippine government and the
Taiwanese government both announced a policy rate hike of 25 bps
and 50 bps, respectively. SOLELY BASED ON THIS INFORMATION, which
of the following will most likely happen?
a. PHP will weaken against USD
b. TWD will weaken against PHP
c. PHP will strengthen against TWD
d. TWD will appreciate against PHP
3. Momo Hirai, CFA is an analyst from a Philippine investment
bank who specializes in government bond trading. The firm has some
excess funds and she is considering to buy a 1-yr treasury bill
which pays a rate of 2.50%. Suppose the expected inflation rate and
BSP policy rate during the said period is 4.00% and 2.00%,
respectively. The real interest rate received on the investment is
closest to ____________.
a. -1.500%
b. 0.500%
c. 1.500%
d. 2.500%
4. Citibank sold a 1-year FX CALL option on USD to a
multinational corporation (MNC) based in the Philippines at a
premium amounting to X at strike/exercise price of Y. Suppose at
the end of one year, USDPHP spot rate is P and USDPHP 1 yr forward
rate is Q, which of the following statements is accurate?
a. At inception, MNC pays Citibank Y for the purchase of the
call option.
b. Citibank receives X when the option matures a year
after.
c. Should MNC exercise the right at maturity, Citibank buys USD
at Y from MNC.
d. Citibank sells USD at Y should the option holder chooses to
exercise the right at maturity.