A. Answer the following multimple choice question No explanation is needed. Only choose the correct answer. 1 mark each. Total Mark 3

1. If a foreign country's interest rate is similar to the UK rate, the forward rate premium or discount will be _________, meaning that the forward rate and spot rate will provide ________ forecasts.

1 point

1. close to zero; similar
2. close to zero; very different
3. substantial; very different
4. substantial; similar

2. Stock returns are much more correlated across countries than within a country.

1 point

1. True
2. False

3. In the 2014-2015 period, the strengthening of the U.S. dollar against the euro caused several U.S.-based MNCs operating in the European Union region to report lower incomes than they had anticipated. This event is an example of:

1 point

1. Translation exposure
2. Fundamental exposure
3. Transaction exposure
4. Economic exposure