1. When it is said that there exists covered interest arbitrage opportunities, the term "covered" means the arbitrage is:

A. Manipulated by Speculators

B. Hedged against exchange rate risk

C. punished by government action against arbitrageurs

2. Which INCOTERM is used most frequently?

A. FAS

B. FOB

C. Ex Works

3. When Americans want to purchase a Japanese product,

A. the Japanese money supply increases

B. The supply of yen rises

C. the demand for yen rises in U.S.

4. Exchange rates depend the LEAST upon:

A. trade deficits

B. government tax policies

C. expected interest rates between nations

D. Expected inflation rates between nations