Question: 1. Answer the following multiple choice question. Each 1 mark i.If Interest Rate Parity (IRP) did not hold, then it would be possible for an

1. Answer the following multiple choice question. Each 1 mark

i.If Interest Rate Parity (IRP) did not hold, then it would be possible for an astute trader to make unlimited amounts of money exploiting the arbitrage opportunity.

a)True b)False?

ii.Assume the spot rate of the euro () is $0.85 today. The spot rate was $0.90 one year ago. This percentage change reflects :

a)about 5.56% depreciation of the euro

b)about 5.56% appreciation of the euro

c)about 5.56% depreciation of the dollar

iii. The commonly accepted goal of MNC is to: a) Maximize profit b) Maximize shareholder wealth c)Maximize sales d)Minimize expenses

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