1. What are the factors that affect exchange rates in the long run? What happens to the exchange rate (for the domestic currency) when the factors are either increased or decreased?
2. If we are comparing the U.S. dollar to the euro, and the euro increased in value from $1.35 to $1.45, what happened to the two currencies? Show the appreciation or depreciation rate for each currency. (Show all work/calculations/formulas.) If we are comparing the U.S. dollar to the yen, and the yen decreased in value from $.99 cents to $.90 cents, what happened to the two currencies? Show the appreciation or depreciation rate for each currency. (Show all work/calculations/formulas.)
3. What are the characteristics of a mortgage that affect the interest rates, and the characteristics that affect the loan terms?