1. The average price of a dozen eggs is $5.00 in the U.S. In Slabovia, a dozen eggs will cost you 1,000 slabs. As you know, the current exchange rate is: one dollar =100 slabs. We conclude that: a. The Slab is overvalued by 100% b. The Slab is undervalued by 100% c. The Slab is overvalued by 10% d. The US Dollar is undervalued by 10% e. Where is Slabovia? 2. The interest rate on one-year British government securities is 1.5%. The UK is expected to experience a 1\% deflation (decrease in prices). According to the Fisher Effect, the real interest rate is: a. 0.5% b. 3.5% c. 2.5% d. 2.5% e. 3.5% 3. The premium on a put Canadian dollar option increases when: a. The Canadian dollar is not expected to fluctuate much (against the US\$) b. The exercise rate increases from 1.3 (Canadian dollars per US dollar) to 3.5 c. The maturity of the option decreases d. The exercise price decreases from 1.3 to 1.1 e. Windsor becomes Canada's capital. 5. In the futures market, if you have a contract, then you have assumed a position. a. Bought; short b. Sold; short c. Sold; long d. Sold; bought e. All of the above 6. The shortcomings of the Interest Rate Parity Theorem (IRPT) include: a. It considers Forward Rates b. It considers interest rate of one country only c. It assumes risk d. It does not assume efficient markets e. None of the above