1. The average price of a Boones Farm bottle of wine is $2.00 in the US. The same wine in Japan is priced at 300. Assuming no transportation costs or tariffs (or other extra costs), and that the current exchange rate is 135=$1, then we conclude that:

1. The Yen is overvalued by 100%
2. The Yen is undervalued by 25%
3. The Yen is overvalued by 10%
4. The US Dollar is undervalued by 135%
5. All the above

3. The exchange rate between the dollar and the euro is $1.20=1; the rate between the dollar and the yen is $0.0125/. What is the exchange rate between the euro and the yen?

1. 1=80
2. 96=1
3. 1=0.0104
4. 0.0104=1
5. All the above

4. The interest rate on one-year Japanese government securities is 1.5%. The real rate of interest in Japan is 2%. According to the Fisher Effect, the expected inflation rate in Japan is:

1. 0.5%
2. 3.5%
3. -0.5%
4. -3.5%
5. 2%

8. Which one of the following would be an indirect quote from the perspective of a German investor?

1. 0.80=1
2. $1.20=1
3. 0.011=1
4. $1.00=0.80