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2. Suppose you are a hedge fund manager based in US, and your research results suggest that Japanese yen is likely to depreciate in the
2. Suppose you are a hedge fund manager based in US, and your research results suggest that Japanese yen is likely to depreciate in the near future. How can you make a profit out of this forecast? a. Borrow and sell USD, and buy and invest in JPY. b. Borrow and sell JPY, and buy and invest in USD. c. Forward contract to buy JPY. d. Options A and B are correct. e. Options A and C are correct. 3. If ........... holds, then the real exchange rate is equal to 1. a. Covered interest rate parity b. Relative purchasing power parity c. The Fisher Effect d. Absolute purchasing power parity e. Uncovered interest rate parity
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