16. Suppose annual inflation rates in the U.S. and Mexico are expected to be 6.5% and 75%,respectively, over the next several years. If the current spot rate for the Mexican peso is $0.05, then the best estimate of the peso's spot value in 3 years is:

A. $0.0113

B. $0.00321

C. $0.00276

D. $0.01190

18. Let the U.S> dollar - yen spot rate be Y120/$. Also, let the 180-day forward exchange rate be Y124.8/$. Then the yen is selling at a per annum ____ of _____

A. premium; 8.00%

B. discount; 8.00%

C. premium; 6.30%

D. discount; 1.57%

21. Suppose it is January 1, 1994, and the Deutsche mark revalues from $0.31 at the beginning of the year to $0.35 at the end of the year. Inflation during the year is 5.2% in the U.S. and 3.5% in Germany. What is the real devaluation (-) or real revaluation (+) of the Deutsche mark during the year?

A. -2.60%

B. 11.02%

C. 9.10%

D. -7.30%