28. The rate of return on a foreign investment depends not only on the domestic interest rate but also on the spot exchange rate and the foreign interest rate one year in the future.
    1. True
    2. False

29. Jenn wants to invest in shares of foreign companies. As a rational investor, her only concern before making the investment should be the rate of return from it.

1. 1. False
   2. True

30. Suppose the spot exchange rate E$/ = 0.64 today. If this rises to 0.72 tomorrow, it will imply that the U.S. dollar has appreciated against the British pound.

1. 1. True
   2. False

31. Assume that the interest rate parity holds between the U.S. and England. Ceteris paribus, a decrease in the expected future $/ exchange rate will:

1. 1. lead investors to shift investments to U.S. assets, and result in an increase in the $/ exchange rate
   2. lead investors to shift investments to U.S. assets, and cause an appreciation of the dollar.
   3. lead investors to shift investments to British assets, and result in an increase in the $/ exchange rate
   4. lead investors to shift investments to British assets, and cause an appreciation of the dollar.