Luna does not believe that the international Fisher effect (IFE) holds. Current one-year interest rates in Thailand are 11 percent, while one-year interest rates in the U.S. are 6 percent. Luna converts $100,000 to Thai baht and invests them in Thailand. One year later, she converts Thai baht back to dollars. The current spot rate of Thai baht is $0.0320. (Note that Thai baht is the official currency of Thailand.)

Question 16 (3.33 points)

If the spot rate of Thai baht in one year is $0.0298, what is Luna's percentage return from her strategy?

Question 16 options:

	1.29%.
	3.37%.
	13.83%.
	19.19%.

Question 17 (3.33 points)

What must the spot rate of Thai baht be in one year for Luna's strategy to be successful?(Round the answer to the 4 decimal places.)

Question 17 options:

	As long as the spot rate is below $0.0335 per Thai baht, Luna's strategy can be successful.
	As long as the spot rate is above $0.0306 per Thai baht, Luna's strategy can be successful.
	As long as the spot rate is above $0.0335 per Thai baht, Luna's strategy can be successful.
	As long as the spot rate is below $0.0306 per Thai baht, Luna's strategy can be successful.