1. Why are more resources not devoted to adequate prudential supervision of the financial system to limit excessive risk taking when it is clear that this supervision is needed to prevent financial crises?

2. When the Canadian dollar is worth less in relation to currencies of other countries, are you more likely to buy Canadian-made or foreign-made jeans? Are Canadian companies that make jeans happier when the Canadian dollar is strong or when it is weak? What about a Canadian company that is in the business of importing jeans into Canada?

3. If you suspect that a company will go bankrupt next year, if you had to hold one type, which would you rather hold, bonds issued by the company or equities issued by the company? Why?

4. Assume that the current exchange rate between the Canadian dollar and the euro is 0.80 euros per Canadian dollar. If the Canadian dollar is expected to appreciate by 10% relative to the euro, what is the new expected exchange rate?

5. Assume that the current exchange rate between Canada and Britain is 0.6268 pounds per Canadian dollar. The three month forward rate between the British pound and the Canadian dollar is 0.4968 pounds per Canadian dollar. What is the percentage difference between current three-month Canadian and British interest rates?