SOLVE AND SHOW WORK!!

1) Suppose fiveyear deposit rates on Eurodollars and Euromarks are 12% and 8%, respectively. If the current spot rate for the mark is $0.50, then the spot rate for the mark five years from now implied by these interest rates is

a. .5997

b. .4169

c. .5185

d. .4821

2. The current fiveyear Euroyen rate is 6% per annum (compounded annually). The fiveyear Eurodollar rate is 8.5%. What is the implied forward premium or discount of the yen (over the current spot rate) for a fiveyear forward contract?

a. 4.17% premium

b. 18.46% discount

c. 11.00% discount

d. 12.36% premium

d Interest Rate Parity Theory

3. If annualized interest rates in the U.S. and France are 9% and 13%, respectively, and the spot value of the franc is $.1109, then at what 180day forward rate will interest rate parity hold?

a. $.1070

b. $.1150

c. $.1088

d. $.1130

c Interest Rate Parity Theory

11. 7.19 Suppose the direct quote for sterling in New York is 1.31105. Then the direct quote for dollars in London is:

a. .71105

b. 2.622030

c. .76258

d. 1.31105