Question: * ANSWER QUESTION #4. Short - Term Interest Rates Annual Percent Year 1995 1996 1997 1998 1999 2000 Malaysia 5.5 6.4 6.4 6.9 3.5 2.9

* ANSWER QUESTION #4.

Short - Term Interest Rates

Annual Percent

Year

1995

1996

1997

1998

1999

2000

Malaysia

5.5

6.4

6.9

3.5

2.9

Exchange Rates

Percent appreciation (+) or depreciation (-) of the U.S. dollar against local currency.

Year

1995

1996

1997

1998

1999

2000

Malaysia

- 4.4

0.3

12.0

39.3

- 3.2

0.0

Consumer Price Index

Percent change from year ago

Year

1995

1996

1997

1998

1999

2000

Malaysia

3.4

3.5

2.7

5.3

2.7

1.5

Q1. During the assigned time period: US dollar appreciated / depreciated (choose one) in real terms against the currency of foreign country.

Q2. During the assigned period, what was the average uncovered rate of return from the US viewpoint for the foreign country?

Q3. During the assigned period, what was the average uncovered rate of return from the foreign country's viewpoint?

Q4. Based on your answers to questions 2 and 3, given perfect hindsight about interest rates and exchange rate changes during the assigned time period you should have: Invested/ borrowed (choose one) in the US and invested / borrowed (choose one) in foreign country. PLEASE EXPLAIN

* ANSWER QUESTION #4.

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