1. Suppose the euro is worth $1.3022. If one-year European bonds are yielding 3.5% and one-year U.S. Treasury bonds are yielding 2.8%, at what end-of-year exchange rate will the dollar return on the two bonds be equal? What amount of euro appreciation or depreciation does this equilibrating exchange rate represent?

2. A Thai bond with a coupon of 9.5% is initially priced at its face value of Bt1,000. At the end of one year, the bond is selling for Bt1,080. If the initial spot rate was Bt25, at what end-of-year exchange rate will the total dollar return on the bond just equal 10%?

3. Suppose the standard deviations of the British and U.S. stock markets have risen to 38% and 22%, respectively, whereas the correlation between the U.S. and British markets has risen to 0.65. What is the new beta of the U.S. market from the British perspective?