1. The spot €:$ is equal to 1.1795. The one-year interest rates on the Eurocurrency market are 4% in euros and 5% in U.S. dollars. What is the three-month forward exchange rate?
A. 1.1908
B. 1.1683
C. 1.1824
D. 1.1766
2. If the exchange rate value of the euro goes from U.S. $1.15 to U.S. $1.05, then:
A. The euro has appreciated, and Europeans will find U.S. goods cheaper.
B. The euro has appreciated, and Europeans will find U.S. goods more expensive.
C. The euro has depreciated, and Europeans will find U.S. goods more expensive.
D. The euro has depreciated, and Europeans will find U.S. goods cheaper