Assume the New Taiwan dollar (NT$) value is tied to the Canadian dollar (CAD) and will remain tied to the Canadian dollar. Last month, a NT$ = 0.35 Singapore dollars. Today, a NT$ = 0.25 Singapore dollars. Assume that there is much trade in the computer industry among Singapore, Taiwan, and Canada and that all products are viewed as substitutes for each other and are of about the same quality. Assume that the firms invoice their products in their local currency and do not change their prices. a. Will the computer exports from the Canada to Taiwan increase, decrease, or remain the same? Briefly explain. (2%) b. Will the computer exports from Singapore to the Canada increase, decrease, or remain the same? Briefly explain.

Assume the New Taiwan dollar (NT$) value is tied to the Canadian dollar (CAD) and will remain tied to the Canadian dollar. Last month, a NT$ = 0.35 Singapore dollars. Today, a NT$ = 0.25 Singapore dollars. Assume that there is much trade in the computer industry among Singapore, Taiwan, and Canada and that all products are viewed as substitutes for each other and are of about the same quality. Assume that the firms invoice their products in their local currency and do not change their prices. a. Will the computer exports from the Canada to Taiwan increase, decrease, or remain the same? Briefly explain. (2%) b. Will the computer exports from Singapore to the Canada increase, decrease, or remain the same? Briefly explain.

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter14: Multinational Capital Budgeting

Section: Chapter Questions

Problem 3ST

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