QUESTION 1

1. An incomplete exchange rate pass-through

   		a. Is a complete pass-through in progress
   		b. Happens when there are no trade frictions between two countries
   		c. Measures how FX rates are impacted by the prices or imported or exported goods
   		d. Measures how prices of imported or exported goods are impacted by FX rates

2. The International Fisher Effect is

   		a. The effect of interest rates differentials on forward rates
   		b. The effect of exchange rates differentials on interest rates
   		c. The effect of interest rates differentials on spot exchange rates
   		d. The effect of exchange rates on interest rates differentials

3. Interest Rate Parity is

   		a. The effect of interest rates differentials on forward rates
   		b. The effect of exchange rates differentials on interest rates
   		c. The effect of interest rates differentials on spot exchange rates
   		d. The effect of exchange rates on interest rates differentials

4. Which statement about futures and forwards below is incorrect?

   		a. Futures trade on the Exchange and forwards trade on the OTC market
   		b. Futures are standardized and traded through a clearinghouse, forwards are not
   		c. Futures and forwards are the same, they are called forwards in Europe, and futures in the US
   		d. They both represent a current exchange rate for delivery of a currency at a future date