1. What is the theory of interest rate parity?
2. What is covered interest arbitrage?
3. Describe two techniques that a company can use to hedge against transaction exchange risk.
4. Describe the factors that cause exchange rates to change over time.
5. What are the advantages to a U.S. firm of financing its foreign investments with funds raised abroad?
6. Describe how the concepts of relative purchasing power parity, interest rate parity, and the international Fisher effect are related.