Hi,

Could you please help me answer the questions below? I need the correct answer, and if possible, a brief explanation. Thanks very much :))

1.Assume the current U.S. dollar- British spot rate is 0.7600 /$. If the current nominal one-year interest rate in the U.S. is 1.95% and the comparable rate in Britain is 0.96%, what is the approximate forward exchange rate for 360 days?

Select one:

a)0.7526 /$.

b)0.7710 /$.

c)0.7675 /$.

d)0.7600 /$.

2."Overshooting" exchange rate changes in response to an action of the Bank of England or Federal Reserve, for example, would an example of __________.

Select one:

a)market efficiency

b)market inefficiency

c)the Fisher Effect.

d)None of the above.

3._________states that differential rates of inflation between two counties tend to be offset over time by an equal but opposite change in the spot exchange rate.

Select one:

a)The international Fisher Effect.

b)The Fisher Effect.

c)Relative purchasing power parity.

d)Absolute purchasing power parity.