1. A key concern of investors is how to manage the trade-off between debt and equity.
   1. True
   2. False

2. When the investors expected appreciation of the Japanese yen against the dollar falls, it implies that the rate of return will decline.
   1. True
   2. False

3. can be used to reduce exchange rate risk.

1. 1. A forward premium
   2. Arbitrage
   3. The spot exchange rate
   4. A forward contract

4. Purchasing Canadian dollars in Canadas Forex market and then selling them later in England, once the Canadian dollar has appreciated, can be described as a forward transaction.

1. 1. True
   2. False

5. Suppose an importer, who expects to receive his shipment of raw materials worth 15,000 in three months, enters into a forward contract where E/$ is 0.80. If at the time of delivery of the raw materials E/$ = 0.83, how much does the trader benefit/lose by entering into the forward contract?
   1. He loses by $677.71
   2. He loses by $450
   3. He gains by $677.71
   4. He gains by $450