1. Suppose the spot Yuan/dollar exchange rate is 6.79. Sue, a Chinese national, has 10,000 Yuan that she wants to invest in a U.S. asset that promises an annual interest of 7 percent. If the expected exchange rate (Yuan/dollar) after a year is 7.2, how much will Sue earn in Yuan? You should include both the interest received and the gain or loss from exchange rate changes in answering this question.

1. 11,346.12 Yuan
2. 10,603.8 Yuan
3. 10,309.25 Yuan
4. 18,026.5 Yuan
5. 17,525.76Yuan

2. Suppose the euro/Australian dollar exchange rate increases from 0.65 to 0.70 within a short period. Meanwhile, the Mexican peso/euro exchange rate rises from 15.71 to 16.27 during the same period. Identify the correct statement from the following.

1. The euro has appreciated against both the Australian dollar as well as the peso.
2. The euro has depreciated against both the Australian dollar as well as the peso.
3. The euro has depreciated against the peso and appreciated against the Australian dollar.
4. The euro has appreciated against the peso and depreciated against the Australian dollar.