1. Describe how these three typical transactions should affect present and future exchange rates:

(a) Diageo imports a year’s supply of French champagne.

Payment in euros is due immediately.

(b) MCI sells a newshare issue toAlcatel, the French telecommunications company. Payment in U.S. dollars is due immediately.

(c) Korean Airlines (KAL) buys five Boeing 747s.

As part of the deal, Boeing arranges a loan to KAL for the purchase amount from the U.S. Export–Import Bank. The loan is to be paid back over the next seven years with a two-year grace period.