Q1: If the spot rate between Japanese Yen and the U.S Dollar is 111 Y/$, the Eurodollar interest rates are 5% while the Euro-yen interest rates are 1%, what could the 6-months Y/$ Forward rates be like?

Q2: What do you understand from hedging the foreign exchange rate risk and why is it important for firms to do so?

Q3: The relative inflation rate in Malaysia is 2% lower than that in South Korea , what could be predicted about the value of Malaysian Ringgit against Korean Won? Explain the parity condition that you are using to answer this.