Question 10 You are the Assistant to the Chief Investment Officer (CIO) of a large UK-based international investment firm. The CIO is reviewing the case for offering a product that will invest in the foreign exchange market on the basis of fair value estimates of each currency, buying undervalued and selling overvalued currencies. The CIO will only consider taking positions in major currencies, not emerging market currencies. You have been asked for your opinion on the attractiveness of such an investment proposition. The CIO has asked that your report explains at least one approach to determining the fair value of exchange rates, and discusses the empirical evidence on the validity of such models. Question 11 You work in the research department of a major commercial bank. The foreign exchange dealers have told you that they have some of the world's smartest investors among their client lists. Briefly explain how your bank might benefit from the actions of these customers. Include in your answer a discussion of the empirical evidence on the information content of customer orders. focusing in particular on their forecasting abilities