If you anticipate the Federal Reserve is going to conduct an open market sale, how would you choose to construct your balance sheet?

1. Net long or net short?
2. Long funded or short funded?
3. Positive or negative maturity gap?
4. Positive or negative repricing gap?
5. Increase or decrease RSA?
6. Increase or decrease RSL?
7. Increase or decrease asset maturity?
8. Increase or decrease liability maturity?
9. Increase or decrease FX assets?
10. Increase or decrease FX liabilities?

If the US and Japan have a trade relationship, explain how the USD can be strengthened against the yen through:

1. Indirect intervention
2. Direct intervention (sterilized and nonsterilized)
3. Answer questions 1-10 above

If the US and Japan have a financial relationship, explain how the USD can be weakened against the yen through:

1. Indirect intervention
2. Direct intervention (sterilized and nonsterilized)
3. Answer questions 1-10 above

If the Federal reserve conducts an open market sale and Japan is trying to peg the yen to the USD:

1. Will Japan be conducting a revaluation or devaluation?
2. What actions will Japan take to re-establish the original peg?
3. How could the Japanese central bank sterilize their action from #2?