1. Exhibit 6.5 presents term structures of interest rates for the US dollar (USD), the euro (EUR), the British pound (GBP), and the Japanese yen (JPY) that prevailed on July 23, 2015. According to Exhibit 6.5 answer the following questions assuming covered interest rate parity holds in the long run.

A. Is dollar selling at a premium or discount against euro, pound, and yen in the forward market?

B. How is dollar premium or discount against each currency likely to change over different maturity dates?

3.50 3.00 2.50 2.00 UK US 150 nterest Rate 1.00 -.EU - JP 0.50 0.00 -0.50 0 5 10 20 25 30 15 Maturity Exhibit 6.5 Term structures for four currencies