Please help me in understanding and answering these questions. Thank you.

1) Say you are a currency trader. You know from your Bloomberg database terminal that the spot rate is U S$0.8545 = N Z$1, NZ Treasury Bills offer a return of 5 percent per anurn, US Treasury Bills offer 2 percent per anum, and the one year forward rate is US$0.8224. [Ra Notes 3-3] a) Say you are trying to work out if the current forward rate to see if the markets are in equilibrium, or they are in disequilibrium and you can make prots by trading currencies. What would you conclude? Why? b) We know the Reserve Bank is increasing domestic interest rates. How will this change your calculations? Why 2) We know that house prices in Auckland are very expensive. We also know that people are buying these houses with very large mortgages. This means the solvency of the banks making the loans depends on people paying back the loans, which depends in part on what happens to house prices. Now what if the continued OCR increases by the Reserve Bank caused the price of land in Auckland to plummet. One scenario is that people may be very worried about the nancial stability of the banks, particularly those people who have deposits with the banks. [Refs M 88-100, Notes 3-1] a) What is the effect of such an event on the cash drain ratio? Why? b) What is the effect of such an event on the reserve asset ratio of the banks who have made a lot of loans to people to buy property in Auckland? Why? c) What is the effect of the changes of the cash drain ratio and the reserve asset ratio on the money multiplier? Why