1) The spot rate on the Canadian dollar is 1.21. Interest rates in Canada are expected to average 2.8 percent while they are anticipated to be 3.2 percent in the U.S. What is the expected exchange rate three years from now?

a) C$1.26

b) C$1.28

c) C$1.20

d) C$1.31

e) C$1.29

2) Assume the exchange rates for the Canadian dollar versus the U.S. dollar are:

Last week .8759 1.1417

This week .8761 1.1414

a) Last week, it took C$.8759 to purchase $1.Ch

b) This week you can exchange C$1 for $1.1414.

c) It is cheaper for an American to travel in Canada this week than it was last week.

d) The Canadian dollar depreciated from last week to this week.

e) You would have made a profit if you had invested $100 in Canadian dollars last week and then converted your money back to U.S. dollars this week. Ignore any interest earnings.