1. Briefly explain one situation where you think zoning is proper and beneficial and one example where you feel it is not.
2. Suppose that the one-year interest rate is 3.5 percent in the United States and 5.0 percent in Germany, and the one-year forward exchange rate is $1.16/€. What must the spot exchange rate be?
3. What’s the pegged exchange rate system? Advantages? Limitations?