Question: 1). If the current exchange rate between the US and the UK is such that the current price of a pound is $1.20. What is

1).

If the current exchange rate between the US and the UK is such that the current price of a pound is $1.20. What is the expected future exchange rate in one year if the US risk free rate is 2% and the UK risk free rate is 2.5% (use 5 decimal places)?

2).

Which is a benefit of including international stocks in an investment portfolio?

A) Greater ability to diversify

B) Political risk exposure

C) Exchange rate risk

D) Financial risk

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