Suppose the spot exchange rate (direct quote) for the Brazilian real is $0.5555 per real. Interest rates on U.S. (rUS)and Brazilian (rBRZL) government bonds are shown below:

Maturity	rUS	rBRZL
1	3.0%	11.30%
2	3.5%	11.70%
3	4.0%	11.80%

You wish to invest in a 3-year project in Salvador, Brazil. The initial cost of the project is 5 million real. Expected net cash flows (NCF) are as follows: NCF1 = 3 million real, NCF2 = 4 million real, and NCF3 = 6 million real. Cost of capital for the project is 15%. Again, the expected forward exchange rate for year 2 is $0.4769. Calculate the NPV for the project. (Caution! If your calculated forward rates are incorrect, your NPV would also be incorrect. So please be careful with your calculations.)

$1.7702 million

$0.5155 million

$1.4443 million

$4.2122 million

The direct spot exchange rate quote for Canadian dollars (C$) is $0.72USD/C$. What is the indirect quote?

		1.18C$/USD
		1.39C$/USD
		$0.72/C$
		13.90C$/USD
		None of the above is correct

A currency swap may be defined as the exchange of a series of ___ for a series of ___.

		Interest payments in one currency; interest payments in another currency
		Interest payments in one currency; dividend payments in another currency
		Fixed interest payments in a currency; variable interest payments in the same currency
		Fixed interest payments in one currency; variable interest payments in another currency
		None of the above