I need ans 11-19

B)i=lti + ER C) i =i +E-R D) i=i +ER Answer questions 11 through 17 based on the following data: . 12-month interest rate on dollar-denominated assets (like US bank deposits) is 1.2% . 12-month interest rate on euro-denominated assets (EU's bank deposits) is 4.0% The current spot exchange rate is one euro for $1.50. . The current 12-month forward exchange rate is one euro for $1.47. . You expect the spot exchange rate might fall to one euro for $1.45 in a year, but you are not so sure. 11. Regarding the forward premium or discount on the foreign exchange market, which of the following is correct? A) There is a forward premium of 2%. B) There is a forward discount of 2%. C) There is forward premium of about 1.36%. D) There is forward discount of about 1.36%. 12. If you are risk averse, then which of the following is correct in your case? A) You engage in a covered interest arbitrage by investing in dollar-denominated assets. B) You engage in a covered interest arbitrage by investing in euro-denominated assets. C) You engage in an uncovered interest arbitrage by investing in dollar-denominated assets. D) You engage in an uncovered interest arbitrage by investing in euro-denominated assets. 13. If you are risk neutral, then which of the following is correct in your case? A) You engage in a covered interest arbitrage by investing in dollar-denominated assets. B) You engage in a covered interest arbitrage by investing in euro-denominated assets. C) You engage in an uncovered interest arbitrage by investing in dollar-denominated assets. D) You engage in an uncovered interest arbitrage by investing in euro-denominated assets. 14. If you engage in a covered interest arbitrage by investing in euro-denominated assets, what is your rate of return based on euros? You must use the full formula for this calculation. A) 0.333% B) 1.920% C) 2.000% D) 4.000% 15. If you engage in a covered interest arbitrage by investing in euro-denominated assets, what is your rate of return based on dollars? You must use the full formula for this calculation. A) 1.920% B) 2.000% C) 4.000% D) 4.250% 16. You are asked to answer question (23) again. But this time, you must use the approximation formula for the calculation. Then what is the rate of return based on dollars: A) 1.950% B) 2.000% C) 2.125% D) 4.000% 17. Suppose that you engage in a uncovered interest arbitrage by investing in euro-denominated assets. What is your expected rate of return based on dollars using the approximation formula? A) 0.333% B) 0.512% C) 0.667% D) 1.500% 18. Using the real exchange rate approach, the nominal exchange rate is determined by A) R = qP/P B) R = qP'/P C) R = P/P. D) R = P /P where q is the real exchange rate, P is the domestic price level, and P'is the foreign price level. 19. Suppose that the euro appreciates 10% in real terms against the dollar. Also suppose that EU's inflation rate is 6% and the US inflation rate by 4%. Then which of the following is correct? A) The euro appreciates 6% in nominal terms against the dollar. B) The euro appreciates 8% in nominal terms against the dollar. C) The euro depreciates 2% in nominal terms against the dollar. D) The euro depreciates 6% in nominal terms against the dollar