1. According to the International Fisher Effect, if U.S. investors expect a 7.5% rate of domestic inflation over one year, and a 2.5% rate of inflation in European countries that use the euro, and require a 4% real return on investments over one year, the nominal interest rate on one year U.S. Treasury securities would be?
2. Assuming you are the CEO of the firm you chose in week 1, you are considering to enter the foreign markets. What are some challenges you might encounter in entering the foreign markets? What additional factors are encountered in international as compared with domestic financial management? Discuss each briefly with examples?