1) Over a period of time in the past, you noticed that the exchange rate between the Thai baht and the dollar changed considerably. In particular, the $:baht exchange rate increased from 25 to 30.

a. Did the Thai baht appreciate or depreciate with respect to the dollar? By what percentage?

b. By what percentage did the value of the dollar change with respect to the Thai baht? (Please show all of your calculations)

2) Consider two countries, A and B whose currencies are a and b, respectively. The interest rate in A is greater than the interest rate in B. Which of the following is true according to the expected exchange rate movement relationship and interest rate parity respectively?

A) A is expected to appreciate relative to B and, A trades with aforward discount.

B) A is expected to appreciate relative to B and, A trades with a forward premium

C) A is expected to depeiciate relative to B and, A trades with aforward discount.

D) A is expected to depeiciate relative to B, and , A trades with a forward premium.