1. From the Big Mac Index: A Big Mac is selling on average for $3.06 in the USA and on average for EUR2.92 in European member countries. If the actual exchange rate is 1.22 USD/EUR, then, relative to its purchasing power parity, the Euro is trading at an FX rate that is:

   		a. undervalued by about 14%
   		b. undervalued by about 22%
   		c. overvalued by about 14%
   		d. overvalued by about 16%

1. Which statement about futures and forwards below is incorrect?

   		a. Futures trade on the Exchange and forwards trade on the OTC market
   		b. Futures are standardized and traded through a clearinghouse, forwards are not
   		c. Futures and forwards are the same, they are called forwards in Europe, and futures in the US
   		d. They both represent a current exchange rate for delivery of a currency at a future date