1.) A U.S. Investor wants to invest $5,000 in China at a 6% interest rate. Today the exchange rate is 6.88 CNY/USD.

How many CNY will the investor have in one year? (36,464 CNY)

The investor exchanges CNY for USD at 6.75 CNY/USD. How many USD does the investor have? ($5,402.07). What is the investors return? (8.04%)

Which currency appreciated? (CNY – it takes fewer CNY to buy a dollar)

Which currency depreciated? (USD – a USD buys fewer CNY).

How much, in percent, did the USD depreciate? (-1.89%)

2.) The current British Pound to Euro exchange rate is £.86/€. How many Euros does it take to buy one British Pound? (£1.1628)

In one year, the exchange rate becomes £.75/€. Which currency appreciated? (£).   Which currency depreciated? (€).

In percent, how much did the appreciating currency rise? (14.67%)

In percent, how much did the depreciating currency fall? (12.79%)