2. Suppose that you are the CFO of a British company. Your home currency is the British pound, GBP. You have just borrowed USD 100M from an American bank for one year. The interest rate (in USD) is 9%. The exchange rate right now is USD 2.7/GBP. What will be the effective cost of the loan (in GBP) if the exchange rate is USD 1.8/GBP one year later?

3. True or False? Suppose that you are a French investor that buys stocks on the Belgian stock exchange. During the year the French franc appreciates and the Belgium stock market goes up. This means that the return for the French investor is smaller than the return for the Belgian investor.