QUESTION 6

1. You may invest your money either in USA at 5% or in Norway at 2%. If the forward premium is 4%, then which of the following is correct?

   		You must invest your money in USA
   		You must invest your money in Norway
   		Investments in USA and Norway will have the same return
   		None

QUESTION 7

1. IRP condition shows us that, as long as the interest rates in two countries are different from each other, forward exchange rate will always deviate from the spot exchange rate.

   True

   False