1. Currencies U.S. dollar foreign-exchange rates. May 5, 2011

Country/currency..in US$..............per US$

British Pound.1.5347.0.6516

Norwegian Kroner.0.1690..5.9173

Thai Baht..0.0310..32.250

Suppose a Big Mac costs $3.27 in Boston, and 101 Thai Baht in Thailand. In this circumstance, what can we say is TRUE?

	a.	Purchasing Power Parity does not hold, and Big Macs are relatively expensive in Thailand
	b.	Purchasing Power Parity holds, and Big Macs cost the same in these two cities
	c.	Purchasing Power Parity does not hold, and Big Macs are relatively cheap in Thailand
	d.	Purchasing Power Parity holds, and Big Macs are relatively cheap in Thailand
	e.	Purchasing Power Parity holds, and Big Macs are relatively expensive in Thailand

2. What can we infer from the fact that the correlation coefficient between Project George and Project Puddy was 0.00?

	a.	That the expected return of the two projects will be zero (or close to zero)
	b.	That the projects have a direct relationship with each other
	c.	That the covariance between the two projects will be equal to zero
	d.	That the state dependent returns must have had equal probability of occurring
	e.	That the diversification gain between the two projects will be zero (or close to zero)