The Swedish Krona is quoted at .0313-.0315 US\$/Krona spot. 6-month forward contracts are quoted .0311-.0314. 6-month interest rates in the US (for both borrowing and investing) are at a 5% annual rate. What 6 -month annual interest rate in Sweden for borrowing and investing would allow an arbitrage? a) 6% b) 7% c) 8% d) All of the above e) None of the above A US firm selling only in the US has a major French competitor. At an executive meeting the treasurer asks you if the firm should do anything about international exposure. What would be an appropriate answer? a) No, we don't have to worry because we don't have any exposure. b) Yes, we have exposure if the euro has a real appreciation. We could think about hedging this exposure. c) Yes, we have exposure if the euro has a real depreciation. We could think about hedging this exposure. d) Yes, we could be exposed if the euro either appreciates or depreciates, but there's nothing we can do to hedge. e) No, we don't have any exposure because purchasing power parity holds. Your firm is making a bid to build a new factory in Malaysia. If you win the bid, you will be paid in Malaysian currency. Which of the following is the most appropriate hedge? a) buy puts on Malaysian currency b) buy calls on Malaysian currency c) buy forwards on Malaysian currency (A) sell forwards on Malaysian currency