28. The expected rate of return on a British asset depends on two things, the British interest rate and the expected percentage change in the value of the pound.
    1. True
    2. False

29. Suppose the spot Yuan/dollar exchange rate is 6.79. Sue, a Chinese national, has 10,000 Yuan that she wants to invest in a U.S. asset that promises an annual interest of 7 percent. If the expected exchange rate (Yuan/dollar) after a year is 7.2, calculate the rate of return Sue earns on her investment.
30. 1. 0.9 percent
    2. 6.04 percent
    3. 5.6 percent
    4. 13.46 percent

30. If the exchange rate E$/ falls below the equilibrium, investors will shift funds to increase investment in British assets.

1. 1. True
   2. False

31. Identify the correct statement from the following.

31. 1. If $1 can buy 0.64, then it implies that 1 can buy $0.64.
    2. The value of the Japanese yen in terms of dollar is the $/ exchange rate.
    3. The value of a U.S. dollar in terms of British pounds is the $/ exchange rate.
    4. d. If $1= 0.64, then 1= $0.36
32. Foreign direct investment in its classic form is defined as a company from one country making a physical investment into building a factory in another country.

1. 1. True
   2. False