Which one of the following statements is most correct about international lending risk?

		The probability that a foreign corporation will not be able to repay all or a part of its loans is called credit risk
		The probability that a foreign corporation will not be able to repay all or a part of its loans is called country risk
		Credit risk is political in nature because it's related to the political situations in a country
		The probability that a foreign corporation will not be able to repay all or a part of its loans is called market risk
		The probability that a foreign corporation will not be able to repay all or a part of its loans is called currency risk

The interest rate (on an annual basis) on 6-month Treasury bills is 2% in Japan and 4% in the U.S. and the spot rate 120/$. If the 6-month forward rate is 118/$ and you have $1,000,000 to invest, can you make a covered interest arbitrage profit and how much? Assume you are a U.S. investor.

		No, arbitrage profit is not possible
		Yes, $ 7,118.64
		Yes, $ 3,487.39
		Yes, $ 2,911.39
		Yes, $ 1,428.57

What are the initial and secondary effects of expansionary fiscal policy an open economy with floating exchange rates?

		Aggregate demand increases, then increases further strengthening the policy's expansionary
		Aggregate demand decreases, thus eliminating the policy's expansionary effect on real GDP
		Aggregate demand increases, thus strengthening the policy's expansionary effect on real GDP
		Aggregate demand does not change and has no effect on real GDP
		Aggregate demand increases, then decreases weakening the policy's expansionary effect on real GDP

The Federal Reserve enters into currency swap agreements with other central banks to

		Stabilize the value of the U.S. dollar
		Loan U.S. dollars on long-term basis
		Loan gold on long-term basis
		Stabilize the value of foreign currencies
		Loan U.S. dollars on short-term basis

The interest rate (on an annual basis) on 6-month Treasury bills is 2% in Japan and 4% in the U.S. and the spot rate 120/$. If the 6-month forward rate is 118/$ and you have $1,000,000 to invest, what do you have to do to make a covered interest arbitrage profit? Assume you are a U.S. investor.

		Convert Japanese yen to U.S. dollars at the spot rate today then convert U.S. dollars to Japanese yen at the spot rate at maturity.
		Enter into a forward contract today to sell Japanese yen at maturity
		Enter into a forward today contract to sell U.S. dollars at maturity
		Enter into a forward contract today to buy Japanese yen at maturity
		Do nothing today, just convert the Japanese yen to U.S. dollars at the spot rate at maturity