The P & Gs foreign exchange department is interested in hiring you after learning that you are taking International Finance class from Professor Kim at UCs LCB. The following information and a series of questions are presented for you to convince the company that hiring you will be definitely a positive NPV decision, i.e., the MNCs value will increase!!!

As of today, spot rate of Canadian dollar (C$) and pound sterling () are, respectively, $.70 and $1.596. Also, cross exchange rate is 1 = C$2.28.

In addition, one-year forward rates are C$ = $.71 and = $1.58004; one-year interest rates are in U.S. 8%, in England 9.09%, and in Canada 7%, respectively.

1. Show whether triangular arbitrage profit is feasible or not.

2.Show covered interest arbitrage profit if it is possible.

3.Forecast the annual percentage change using the international Fisher effect in value.

4. Show changes in the value of if the inflation rates in England and the U.S. are 6% and 4%, respectively.

5. Explain the type of direct intervention that would place downward pressure on the value of .