The Swiss Franc is trading at $1\mathrm{.}1464\frac{\text{\$}}{S}Fr,$ the euro is trading at $1\mathrm{.}0828\frac{\text{\$}}{?}$ euro. If you can buy or sell SFr$/$euro at $0\mathrm{.}9451,$ is there an arbitrage? If so$,$ how much can you make with one roundtrip using $$1,000,000?$

The South African Rand is trading $19\mathrm{.}12-19\mathrm{.}31$ Rand$/$$$.$ The UK pound is trading at $1\mathrm{.}27031\mathrm{.}2712$ $$/$pound$.$ What range of pound$/$Rand rates imply no opportunity for arbitrage? Make sure to go out to $5$ decimal places in your answer.

Two countries, the US and England, produce only one good, wheat. Suppose the price of wheat is $$2\mathrm{.}50$ per pound in the US$,$ and $1\mathrm{.}35$ pounds in the UK$.$

a$.$ According to the law of one price, what should the $ :pound spot exchange rate be$?$

b$.$ Suppose the price of wheat over the next year is expected to rise to $$2\mathrm{.}60$ in the US and to $1\mathrm{.}45$ pounds in the UK$.$ What should the one$-$year $ :pound forward rate be$?$

During $1995,$ the Mexican peso exchange rate rose from $5\mathrm{.}33$ peso $\frac{?}{?}$$$7$ to $7\mathrm{.}64$ peso $\frac{?}{?}$$$.$ At the same time, US inflation was approximately $3\%$ in contrast to Mexican inflation of about $48\mathrm{.}7\%.$

a$.$ By how much did the nominal value of the peso change during $1995?$

b$.$ By how much did the real value of the peso change over this period?

Assume interest rates in the US are at $4\mathrm{.}8\%$ per year, and interest rates in Israel are at $3\mathrm{.}25\%$ per year, and that the shekel is trading at $3\mathrm{.}76$ sheckels$/$dollar $($on the spot market, i$.$e$.$ for exchange today$).$

a$.$ If the two$-$year forward rate on sheckels is $3\mathrm{.}63$ sheckels$/$dollar$,$ do you want to invest in dollars or sherkels to maximize vour returns for the next two vears?