1. The one-year interest rate in New Zealand is 6percent. The one-year U.S. interest rate is 10 percent. The spot rate of the New Zealand dollar (NZ$) is $.50. The forward rate of the New Zealand dollar is $.54. Is covered interest arbitrage feasible for U.S. investors? Is it feasible for New Zealand investors? In each case, explain why covered interest arbitrage is or is not feasible. Assume initial investment of 1000,000 whether investing in USD or New Zealand dollar

2. Assume that Carbondale Co. expects to receive S$600,000 in one year. The existing spot rate of the Singapore dollar is $.60. Assume the following money market rates: US Singapore Deposit rate 7% 5% Borrowing rate 8% 6% Given this information, determine the result of a money market hedge.

3. Derive the IRP