Question: #1. Use the information below to answer the following question. Exchange Rate Interest Rate APR S 0 ($/) $ 1.60 = 1.00 i $ 2

#1. Use the information below to answer the following question.

	Exchange Rate				Interest Rate	APR
S₀($/)	$	1.60	=	1.00	i_$		2	%
F₃₆₀($/)	$	1.58	=	1.00	i		4	%

If you had borrowed $1,000,000 and traded for euro at the spot rate, how many do you receive? (I had previously asked the same question but got two different answers. I was told 1,000,000/1.60 =625,000... and FV= 625,000(1+0.04)=650,000) Which one is the correct answer?

2. Use the information below to answer the following question.

	Exchange Rate				Interest Rate	APR
S₀($/)	$	1.60	=	1.00	i_$		2	%
F₃₆₀($/)	$	1.58	=	1.00	i		4	%

If you had 1,000,000 and traded it for USD at the spot rate, how many USD will you get?

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