Question 10 Please use the data below, to answer the following question. 4 Interest rate in US (Rh): 7% Interest rate in Canada (Rh): 5% Line of credit in US: USD 10,000,000 Line of credit in Canada: CAD 10,000,000 The current spot rate for CAD $0.8000 (So): 1-year forward rate for CAD (F): $0.816 Your covered interest arbitrage profit is: ese F2 80 FS 880 FA FS - F6 44 F7 S & 5 6 7Question 12 Please use the data below, to answer the following question. Interest rate in US (Rh): 5% Interest rate in Canada (Rh): 7% The current spot rate for CAD $0.800 (SO): 1-year forward rate for CAD (F): $0.791 What should be the forward premium for CAD according to Interest Rate Parity? 101.90% O 2.00% O 1.90% O - 1.87% 888 44 %% &Question 14 Please use the data below, to answer the following question. BigMac price in the USD 3.25 US BigMac price in UK GBP 1.50 Current Exchange 1 USD = GBP Rate 0.50 What is the PPP exchange rate where the price of a Big Mac will be identical in the US and UK? O 1 USD = 2.00 GBP O 1 USD = 2.17 GBP 1 USD = 0.50 GBP 1 USD = 0.46 GBP F2 80 FS 808 F4 FS 44 17 S % 5 6 710 pts Question 11 Please use the data below, to answer the following question. Interest rate in US (Rh): 7% Interest rate in Canada (Rh): 5% The current spot rate for CAD $0.800 (So): 1-year forward rate for CAD (F): $0.812 The covered interest rate arbitrage trades that this will generate will cause: Downward pressure on the CAD's spot rate. Downward pressure on the CAD's forward rate. F2 80 FS 44 $7 S % &D Question 13 10 pts Please use the data below, to answer the following question. BigMac price in the USD 3.25 US BigMac price in Japan JPY 290 Current Exchange 1 USD = JPY Rate 100 At the going exchange rate, the dollar price of BigMac in Japan is: O $3.40 O $3.10 $3.25 O $2.90 F2 80 FS 800 F4 FS 14 F7 & 5 7Question 16 10 pts Please use the data below, to answer the following question. BigMac price in the USD 3.25 US BigMac price in UK GBP 1.50 Current Exchange 1 USD = GBP Rate 0.50 Based on absolute PPP violations present in the above data, it would be beneficial for a US company that: exports to UK O imports from UK F2 80 FS 888 F4 FS 44 F7 F& & 4 5 V OQuestion 17 10 pts Please use the data below to answer the following question. Expected annual inflation rate in the US |6% (Ih) Expected annual inflation rate in 16% Mexico (If) Current Exchange Rate 1 MXN = USD 0.10 According to Purchasing Power Parity, expected percentage change in the price of the MXN during a one-year period should be: O -8.62% 10.00% O 9.43% O -10.00% 80 FS 888 F4 S % 4 5 VP 6Question 18 10 pts Please use the data below to answer the following question. Expected annual inflation rate in the US 6% (Ih Expected annual inflation rate in 4% Switzerland (If) Current Exchange Rate 1 CHF = USD 0.75 According to Purchasing Power Parity, one year later, the expected spot price for CHF should be: O $0.7358 O $0.7644 $0.7486 O $1.5144 80 FS 988 FS 44 FT S 3 5 6 V10 pts Question 15 Please use the data below, to answer the following question. BigMac price in the USD 3.50 US BigMac price in MXN 80 Mexico Current Exchange 1 USD = MXN Rate 20 Based on PPP, the MXN is overvalued by 14.29% undervalued by 14.29% overvalued by 12.50% undervalued by 12.50% F2 888 F4 FS 44 $7 S % A & 5 6 V