# 1 If the Yen trading at a spot price of 111 yen to USD and the 1-year forward rate is 115 Yen to 1 USD? What is premium of discount of the Yen, relative to the USD? 1. 3.48% Discount 2. 3.48% premium 3. 3.60% discount 4. 3.60% Premium

# 2 Suppose that inflation next year is 8% in japan and 4% in the United States. If the current spot rate is JPY107 = USD1, what is the expected spot rate at the end of the year? 1. JPY102.72 = USD1 2. JPY103.04 = USD1 3. JPY111.12 = USD1 4. JPY111.82 = USD1

# 3 Suppose the one-year interest rate in the United states is 7%. What would you expect the interest rate to be in the UK, if expected inflation is 4% in the United states and 8% in the UK? 1. 5.19% 2. 7.93% 3. 9.08% 4. 11.12%