Question 19 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 If one year later, the spot rate of CHF turns out to be $0.762, then the CHF experienced in "real" purchasing power. O a gain O a loss O no change ast F2 80 FS 868 F4 FS 44 17 $ % 5 610 pts D Question 26 Which one of the following market conditions will produce a profit for a hedge-fund manager that is planning to borrow in UK and invest in the US. One could answer this question without a calculator Interest Rate Interest Rate Expected Annual Percentage Change in in US in UK the Direct Quote for the British Pound Market Condition 1 10% 15% -7% Market Condition 2 10% 5% +7% Market Condition 3 10% 5% +8% Market Condition 4 10% 15% 3% Market Condition 1 Market Condition 2 Market Condition 3 Market Condition 4 F2 80 FS 888 F4 FS 44 57 % 3 4 & 5 6 OD Question 25 Please use the data below, to answer the following question. Interest rate in US (Rh): 7.5% Interest rate in Euro Zone (Rh): 3.5% Line of credit in USD: USD 20,000,000 Line of credit in EUR: EUR 20,000,000 The current spot rate for EUR (So): $1.25 The expected spot rate for EUR 1 $1.29 year later ($1): Based on your recommended investment strategy, you should earn a net profit of: est F2 888 F4 FS 44 F7 FB 5 6 BPlease use the data below, to answer the following question. Interest rate in US (Rh): 3.5% Interest rate in Euro Zone (Rh): 7.5% The current spot rate for EUR (So): $1.25 The expected spot rate for EUR 1 $1.21 year later ($1): What is the uncovered rate of return from the US point of view (Ruh)? O 1.88% O 6.92% O 4.06% 11.05% 80 FS 888 4 44 $7 S 3 5 & 610 pts D Question 27 According to the International Fisher Effect _has an effect on O the difference between the domestic and foreign interest rates; the percentage difference between the current spot exchange rate and future spot exchange rate the sum of the real rate and inflation premium; the nominal rate of interest O the difference between the real rate and inflation premium;; the nominal rate of interest. the difference between the domestic and foreign interest rates; the forward premium or discount the difference between the domestic and foreign inflation rates; the percentage difference between the current spot exchange rate and future spot exchange rate est F2 80 FS 886 F4 FS 44 $7 % 5 6D Question 23 Please use the data below, to answer the following question. Interest rate in US (Rh): 7.5% Interest rate in Euro Zone (Rh): 3.5% The current spot rate for EUR (So): $1.25 The expected spot rate for EUR 1 $1.29 year later (S1): What is the uncovered rate of return from the Euro Zone point of view (Ruf)? 6.81% O 0.29% 10.94% O 4.17% ese 2 F2 80 FS Ba8 F4 ES 44 17 % 4 5D Question 24 Please use the data below, to answer the following question. Interest rate in US (Rh): 3.5% Interest rate in Euro Zone (Rh): 7.5% The current spot rate for EUR (So): $1.25 The expected spot rate for EUR 1 $1.21 year later ($1): Based your estimated uncovered rates (Ruf & Ruf), you should borrow in and invest in O USD; EUR O EUR; USD ese F2 80 FS 808 F4 FS 44 F7 FB S 5Question 20 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 If one year later, the spot rate of CHF turns out to be $0.762, then the net cash flow of a US exporter to Switzerland will: O Increase O Decrease F2 80 FS 888 FA FS 14 $7 % 4 5 610 pts Question 21 Please use the data below to answer the following question. Expected annual inflation rate in the US 6% (Ih) Expected annual inflation rate in Euro 2% Zone (If) Current Exchange Rate 1 EUR = USD 1.10 If one year later, the spot rate of EUR turns out to be $1.152, then the net cash flow of a US importer from the Euro Zone will: Increase O Decrease F2 80 FS 880 F4 FS F6 44 F7 FB S % & 5 6 7