1. Assume that interest rate parity holds and that 90-day risk-free securities yield 5% in the United States and 5.3% in Germany. In the spot market, 1 euro equals $1.40. What is the 90-day forward rate trading at a premium or a discount relative to the spot rate?

2. Suppose that the exchange rate is $.60 dollars per Swiss Franc. If the franc appreciates 10% against the dollar, how many francs would a dollar buy tomorrow?