Question $27$

$$ $$30,000$

$$128,400$

$$ $$48,000$

$$314,694$

Question $28$

$2\mathrm{.}5$ pts

rate for Euro, one year from now $=$$$1\mathrm{.}164$; Interest rate in the U$.$S$.=7\mathrm{.}50\%$; Interest rate in the Euro zone $=12\mathrm{.}50\%$

If the current $1-$year forward rate for Euro is $$1\mathrm{.}140$ and you wanted to set up a covered interest rate arbitrage, which of the following forces should result:

Downward pressure on the Euro forward rate.

Upward pressure on the U$.$S$.$ interest rate.

Downward pressure on the Euro spot rate.

Downward pressure on the Euro zone interest rate.

Question $29$

$2\mathrm{.}5$ pts

The price of a Big Mac in USA is $$3\mathrm{.}25$ and $290$ Yen in Japan. The current spot rate is: $1$ USD $=JPY95.$ This implies that the JPY is $($BLANK$)$ against the dollar.

$$ overvalued

undervalued