1.If you execute a carry trade and the currency in which you borrow appreciates by more than the interest rate differential, the carry trade will not be profitable ?

a)T

b)F

2.If you anticipate a foreign currency inflow in 6 months, you worry about the foreign currency ________ between now and 6 months from now?

a)Depreciating

b)Appreciating

3.A Japanese firm wishing to hedge an exposure to the dollar in the form of cash inflows denominated in dollars might?

a)Purchase a Yen put option

b)Purchase a Yen call option

4.A strengthening of the US dollar versus the MXN lowers the value of US investments in Mexico?

a)T

b)F

5.Reducing international trade restrictions is likely to increase international competition in the production of goods and services?

a)T

b)F

6.A Canadian borrower borrows $225,000 from an American bank. The interest rate is 8%, and the Canadian dollar depreciates 3% over the next year. Assuming an initial exchange rate of $.9400/C$, what is the Canadian borrower's C$-denominated cost of borrowing (in percent)?