1. Which of the following is true?
The PPP (purchasing power parity) suggests that the inflation rate differential reflects the expected change in the exchange rate.
The FEP (forward expectation parity) suggests that the nominal interest rate differential reflects the expected change in the exchange rate.
The IRP (interest rate parity) suggests that the nominal interest rate differential reflects the expected change in the exchange rate.The IFE (international fisher effect) states that any forward premium or discount is equal to the change in the exchange rate.None of the above.
2. If a security has mean-zero cash flows...
A. it is worth zero right now.
B. it is a positive NPV investment.
C. it has the beta of the market portfolio.
D. it is identical to investing in a Treasury bill.
3. "All things have a natural price, and this price is connected to the cost." Such a statement would have been made by which of the following?
A. Thomas Aquinas
B. a Nominalist (like Roger Bacon)
C. a Franciscan intellectual
D. All of the above would have made an assertion like this.