QUESTION 1

You have the following information. The current nominal interest rate for a 1-year deposit in a U.S bank is 5% (0.05). The current spot exchange rate between the U.S and Venezuela is 1.0 (U.S dollars per Venezuelan Bolivar's). The 1-year forward exchange rate between the US and Venezuela is 0.50. You can assume that UIP holds. What is the nominal interest rate in Venezuela?

• 0.73
• 1.05
• 0.90
• 0.07
• We do not have enough information

QUESTION 2

What is the expected spot U.S exchange rate one year from now?

• 0.25
• 1.0
• 0.05
• 1.5
• 1.0

QUESTION 3

Where should you invest, the US or Venezuela?

• The US
• Venezuela
• They are the same.
• We do not have enough information.