1.) Define the interest rate parity theory, purchasing power parity theory, law of one price, capital market equilibrium, and expectations theory of forward rates.

2.) Explain the relationships between interest rate parity, expectations theory, law of one price, and capital market equilibrium.

3.) What is the effect of exchange rate risk on the rate of return an investor would receive by investing internationally?

4.) Distinguish between the two methods of calculating the NPV for an international project.