[1.] If it takes $0.71 U.S. dollars to purchase one Swiss franc, how many Swiss francs can one U.S. dollar buy?

a. 1.00

b. 2.81

c. 0.50

d. 0.71

e. 1.41

[2.] Suppose the exchange rate between U.S. dollars and Swiss francs is SF 1.41 = $1.00, and the exchange rate between the U.S. dollar and the euro is $1.00 = 1.64 euros. What is the cross-rate of Swiss francs to euros?

a. 0.43

b. 1.64

c. 2.27

d. 1.41

e. 0.86

[3.] If the spot rate of the Israeli shekel is 5.51 shekels per dollar and the 180-day forward rate is 5.97 shekels per dollar, then the forward rate for the Israeli shekel is selling at a ____ to the spot rate.

a. premium of 18%

b. discount of 18%

c. discount of 8%

d. premium of 8%

e. premium of 16%

[4.] Suppose one U.S. dollar can purchase 144 yen today in the foreign exchange market. If the yen depreciates by 8.0% tomorrow, how many yen could one U.S. dollar buy tomorrow?

a. 144.0 yen

b. 72.0 yen

c. 155.5 yen

d. 78.0 yen

e. 133.5 yen

[5.] If the inflation rate in the United States isgreaterthan the inflation rate in Britain, other things held constant, the British pound will

a. Appreciate against other major currencies.

b. Appreciate against the U.S. dollar.

c. Appreciate against the dollar and other major currencies.

d. Remain unchanged against the U.S. dollar.

e. Depreciate against the U.S. dollar.

[6.] Which of the following statements isNOTCORRECT?

a. Foreign bonds are bonds sold by a foreign borrower but denominated in the currency of the country in which the issue is sold.

b. A foreign bond might pay a higher nominal interest rate than a U.S. bond.

c. The term Eurobond applies only to foreign bonds denominated in U.S. currency.

d. Foreign bonds and Eurobonds are two important types of international bonds.

e. Any bond sold outside the country of the borrower is called an international bond.

[7.] Suppose a foreign investor who holds tax-exempt Eurobonds paying 9% is considering investing in an equivalent-risk domestic bond in a country with a 28% withholding tax on interest paid to foreigners. If 9% after-tax is the investor's required return, what before-tax rate would the domestic bond need to pay to provide the required after-tax return?

a. 13.57%

b. 12.50%

c. 9.00%

d. 10.20%

e. 11.28%