Question 10 3.33 pts In the above example of a US firm having the euro receivables due in six months, the money market hedge would involve: Convert euro to dollar at spot Borrow dollar for six months Convert dollar to euro at spot Borrow euro for eight months Question 11 3.33 pts Which of the following Current Account deficits are indefinitely sustainable? If the current account deficit is smaller than the current account surplus, then it could be sustainable. If the current account deficit is smaller than our trade surplus, then it is sustainable. If the current account deficit is smaller than long-term GDP growth, then it could be sustainable. No negative current account balance is indefinitely sustainable. Question 12 3.33 pts Are currency carry trade strategies arbitrage opportunities? Yes because it usually makes money and can be levered No, because they require large out-of-pocket expenses No, because the exchange rate might move against you Yes, because exchange rate risk is covered Question 10 3.33 pts In the above example of a US firm having the euro receivables due in six months, the money market hedge would involve: Convert euro to dollar at spot Borrow dollar for six months Convert dollar to euro at spot Borrow euro for eight months Question 11 3.33 pts Which of the following Current Account deficits are indefinitely sustainable? If the current account deficit is smaller than the current account surplus, then it could be sustainable. If the current account deficit is smaller than our trade surplus, then it is sustainable. If the current account deficit is smaller than long-term GDP growth, then it could be sustainable. No negative current account balance is indefinitely sustainable. Question 12 3.33 pts Are currency carry trade strategies arbitrage opportunities? Yes because it usually makes money and can be levered No, because they require large out-of-pocket expenses No, because the exchange rate might move against you Yes, because exchange rate risk is covered