1. If the yen per dollar (/$) exchange rate rises, then the value of the yen has

	a.	Appreciated
	b.	Depreciated
	c.	Returned to its appropriate level
	d.	Cannot be determined without actual values

2. The measures of under- and over-valuation reported in The Economists Big Mac Index are based on the concept of

	a.	Current account balances
	b.	Interest rate equivalence
	c.	Purchasing power parity
	d.	Sovereign immunity

3. A U.S. investor has borrowed pounds, converted them to dollars and invested the dollars in the U.S. to take advantage of interest rate differentials. To cover the currency risk the investor should

		a. Sell pounds forward
		b. Buy dollars forward
		c. Buy pounds forward
		d. Sell pounds spot