Q1 - According to the Interest Rate Rarity (IRP), theory:

a.The currency of the country with higher interest rates should be at a forward premium in terms of the currency of the country with the lower interest rates. b.The currency of the country with lower interest rates should be at a forward discount rate in terms of the currency of the country with the higher interest rates. c.The currency of the country with lower interest rates should be at a forward premium in terms of the currency of the country with the higher interest rates. d.More than one of these statements. e.None of these statements.

Q2 - One of the strategies used by MNCs for their optimal international capital budgeting is to differentiate between the incremental flows associated with new investment from their existing global investments. What are those factors that should be taken on board for their incremental investment strategies and/or acquisitions:

a.Transfer of Technology b.Opportunity cost and cannibalization

c.Sales creation, transfer pricingandfees and royalties

d.All of the above

e.Only B and C