Question: Please answer questions. Thanks Exercise 2 (LO 2) Spot rates and forward rates. On exchanged for eight foreign currencies (FC). The dollar can be invested

Please answer questions. Thanks Exercise 2 (LO 2) Spot rates and

Please answer questions. Thanks

Exercise 2 (LO 2) Spot rates and forward rates. On exchanged for eight foreign currencies (FC). The dollar can be invested short term at a rate of January 1, one U.S. dollar can be 496, and the FC can be invested at a rate of 5%. 1. Calculate the direct and indirect spot exchange rates as of January 1. 2. Calculate the 180-day forward rate to buy FC (assume 365 days per year). 3. If the spot rate is 1 FC = $0.740 and the 90-day forward rate is $0.752, what does this sug- gest about interest rates in the two countries? 4. Explain why a weak dollar relative to the FC would likely increase U.S. exports. 5. Discuss what would happen to the forward rate if the dollar strengthened relative to the FC

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