b. $15,625 c. $22,136 d. $31,250. 11. If interest rate parity (IRP) exists, then foreign investors will earn the same returns as u.s. investors. a. True b. False 12. Assume the following bid and ask rates of the pound for two banks as shown below: Bid $1.41 $1.39 Ask $1.42 $1.40 Bank A Bank B As locational arbitrage occurs: a. the bid rate for pounds at Bank A will increase; the ask rate for pounds at Bank B b. c. d. will increase. the bid rate for pounds at Bank A will increase; the ask rate for pounds at Bank B will decrease. the bid rate for pounds at Bank A will decrease; the ask rate for pounds at Bank B will decrease. the bid rate for pounds at Bank A will decrease; the ask rate for pounds at Bank B will increase 13. Assume the following exchange rates: $1 -NZ$3, NZ$1 - MXP2, and $1 - MXP5. Given this information, as you and others perform triangular arbitrage, the exchange rate of the New Zealand dollar (NZ) with respect to the U.S. dollar should Mexican peso (MXP) with respect to the U.S. dollar should- a. appreciate; depreciate b. depreciate; appreciate c. depreciate; depreciate d. appreciate; appreciate e. remain stable; appreciate and the exchange rate of the 14. Assume the British pound is worth $1.60, and the Canadian dollar is worth $.80. What is the value of the Canadian dollar in pounds? b. 2.40 c. .80 e. none of the above