1.MCGG is Australian MNC that exports cricket equipment to Asia. MCGG has exposure to both the Indian Rupee (INR) and the Pakistani Rupee (PKR). 60% of the MCGG's funds are INR and 40% are PKR. The standard deviation of exchange movements is 7% for INR and 8% for PKR. Correlation coefficient for the two currencies is 0.50. Based on this information, the standard deviation of these two-currency portfolio is

	A.	0.0643
	B.	0.0623
	C.	0.0586
	D.	0.0485
	E.	0.0356

2.The interest rate in the Sri Lanka is 12.5%. The interest rate in the Australia is 1.5%. The spot rate for the Sri Lankan Rupee is A$0.0082. According to the international Fisher effect (IFE), the Sri Lankan Rupee should adjust to a new level of:

	A.	A$0.0074.
	B.	A$0.0083.
	C.	A$0.0092.
	D.	A$0.0091.
	E.	A$0.0082.

3.A bank has quoted the following exchange rates: A$1.21/US$ and 0.60/A$. Which of the following is a correct cross-rate for the above rates?

	A.	US$0.7260 /
	B.	US$1.3774 /
	C.	1.3774 / US$
	D.	2.0167 / US$
	E.	None of the options.

4.The FX dealer has two quotes. The exchange rate between Sri Lankan Rupee and the Australian dollar is Rs.120 / A$. The exchange rate between Myanmar Kyat and the Australian dollar is MMK895 / A$. Assume that the Australian dollar is the home currency. What is the exchange rate between the two foreign currencies?

	A.	Rs. 7.458 / MMK.
	B.	Rs. 7.845 / MMK.
	C.	Rs. 0.134 / MMK.
	D.	Rs. 0.127 / MMK.
	E.	none of the above.

5.The 60-day period lending rate for the Mexican Peso (MXN) is 0.80 percent and the 60-day period borrowing rate for the Australian dollars (A$) is 1.05 percent. Delta bank expects the exchange rate of the MXN to appreciate from its current level of A$0.063 to A$0.070 in 60 days. Assume that Delta can borrow A$ 1,000,000.

If the MXN appreciates to A$0.07 in 60 days as expected, what is Deltas profit in Australian dollars?

	A.	A$ 1,578,096
	B.	A$ 114,778
	C.	- A$ 2500
	D.	A$ 110,467
	E.	A$ 109,500