1. Suppose the 1 Singapore dollar (SGD) = 62.87 yen. If this increases to 63.42 yen in a few months, we can conclude that:

1. Japanese goods and services are becoming more expensive.
2. the yen is appreciating against the SGD.
3. the SGD has appreciated by 0.87 percent.
4. the investors are demanding more yen in the Forex market.

2. A key concern of investors is how to manage the trade-off between debt and equity.

1. True
2. False

3. Suppose interest rate parity holds between the U.S. and England. If the Bank of England reduces the domestic interest rate, all other things being equal the British investors will shift funds from American investments to domestic investments.
   1. True
   2. False

4. Which of the following statements is true about hedging?

1. It protects the hedger from a downside loss
2. It assures a gain to the hedger
3. It is beneficial for a buyer when the currency appreciates
4. It eliminates exchange rate risk completely