4. You have $1 million that you want to invest risk-free for one year. At the end of the year, you want to hold the money in US$. Assume that you have two risk-free invest- ments: one in US T-bills that generates a return of 5.5% per year and the other in Japa nese T-bills that has an interest rate of 0.5% per year. There are no transactions costs. Assuming that forward rates are biased which of the following would you prefer? a) Investing in US T-bills b) Investing in Japanese T-bills c) Investing in both, but more money into US T-bills d) You are completely indifferent 5. When is a carry trade profitable? a) As long as the interest rate differential is greater than the appreciation of the invest- ment currency against the funding currency b) As long as the interest rate differential is smaller than the appreciation of the funding currency against the investment currency c) As long as the interest rate differential is greater than the appreciation of the funding currency against the investment currency d) A currency carry trade is never profitable 4. You have $1 million that you want to invest risk-free for one year. At the end of the year, you want to hold the money in US$. Assume that you have two risk-free invest- ments: one in US T-bills that generates a return of 5.5% per year and the other in Japa nese T-bills that has an interest rate of 0.5% per year. There are no transactions costs. Assuming that forward rates are biased which of the following would you prefer? a) Investing in US T-bills b) Investing in Japanese T-bills c) Investing in both, but more money into US T-bills d) You are completely indifferent 5. When is a carry trade profitable? a) As long as the interest rate differential is greater than the appreciation of the invest- ment currency against the funding currency b) As long as the interest rate differential is smaller than the appreciation of the funding currency against the investment currency c) As long as the interest rate differential is greater than the appreciation of the funding currency against the investment currency d) A currency carry trade is never profitable