1. Using the Cross-Rate (Please solve)

Use the information in Table 18.2 to answer the following questions:

a. Which would you rather have, $100 or 100? Why?

b. Which would you rather have, $100 Canadian or 100? Why?

c. What is the cross-rate for Canadian dollars in terms of British pounds? For British pounds in terms of Canadian dollars?

2. Interest Rate Parity (Please solve)

Use Table 18.2 to answer the following questions. Suppose interest rate parity holds, and the current risk-free rate in the United States is 2.1 percent per six months. What must the six-month risk-free rate be in Australia? In Japan? In Great Britain?

TABLE 18_2 EXCHANGE RATES: MAY 5, 2021 \begin{tabular}{lrr} \hline Country/Currency & USD Equiv & Currency per USD \\ \hline Americas & & \\ Argentina peso & .0107 & 5.6694 \\ Brazil real & .1868 & 1.2269 \\ Canada dollar & .8151 & 705.10 \\ Chile peso & .001418 & 1 \\ Ecuador US dollar & 1 & 20.2585 \\ Mexico peso & .049 .4 & 4.0450 \\ Uruguay peso & .02270 & \end{tabular} Asia-Pacific Australia dollar 1-mo forward 3-mos forward 6-mos forward China yuan Hong Kong dollar India rupee Indonesia rupiah Japan yen 1-mo forward 3-mos forward 6-mos forward Malaysia ringgit New Zealand dollar Pakistan rupee Philippines peso Singapore dollar South Korea won Taiwan dollar Thailand baht Vietnam dong Europe Czech Rep. koruna Denmark krone Euro area euro Hungary forint Norway krone Poland zloty Romania leu Russia ruble Sweden krona Switzerland franc 1-mo forward 3-mos forward 6-mos forward Turkey lira UK pound 1-mo forward 3-mos forward 6-mos forward Middle East/Africa Bahrain dinar Egypt pound Israel shekel Kuwait dinar Oman sul rial Qatar rial Saudi Arabia riyal South Africa rand \begin{tabular}{|c|c|} \hline .7748 & 1.2907 \\ \hline .7749 & 1.2905 \\ \hline .7751 & 1.2902 \\ \hline .7753 & 1.2898 \\ \hline .1545 & 6.4736 \\ \hline .1287 & 7.7699 \\ \hline .01355 & 33.79165 \\ \hline .0000693 & 14435 \\ \hline .00916 & 109.20 \\ \hline .00914 & 109.42 \\ \hline .00908 & 110.08 \\ \hline .00899 & 111.21 \\ \hline .2429 & 4.1175 \\ \hline .7215 & 1.3860 \\ \hline .00654 & 152.92 \\ \hline .0208 & 48.0270 \\ \hline .7487 & 1.3356 \\ \hline .0008889 & 1124.99 \\ \hline .03576 & 23.97 \\ \hline .03213 & 31.120 \\ \hline .00004336 & 23062 \\ \hline .04655 & 21.484 \\ \hline .1615 & 6.1917 \\ \hline 1.2006 & .8330 \\ \hline .00334459 & 298.99 \\ \hline .1197 & 8.3554 \\ \hline .2725 & 3.6301 \\ \hline .2626 & 3.8084 \\ \hline .01337 & 74.797 \\ \hline .1178 & 8.4862 \\ \hline 1.0952 & .9134 \\ \hline 1.0945 & .9137 \\ \hline 1.0931 & .9145 \\ \hline 1.0909 & -9167 \\ \hline .1202 & 8.3175 \\ \hline 1.3909 & .7190 \\ \hline 1.3910 & .3189 \\ \hline 1.3912 & .3188 \\ \hline 1.3914 & .7187 \\ \hline \end{tabular} 2.65415 .0638 .3062 3.3164 2.59757 .2746 2667 .0696 .3768 15. 6682 3.2654 .3015 .38 3.6410 3. 7501 14.3688