1. Which of the following statements about the correlation of exchange rates of different foreign currencies to the US dollar are true?
a. The Chinese Yuan has historically been highly correlated with how other countries move vs the US dollar
b. Historical correlations are good predictors of future correlations of currency movements vs the us dollar
c. Movements in the euro, pound and other European currencies are highly correlated in most periods
d. Historically, currency correlations have been remarkably stable over long periods of time
2. The 1 year forward rate for the Euro is currently selling at a discount of 5.20%.If the current spot rate of the euro is $1.352, what is the forward rate?
$1.404
$1.282
$1.300
$1.422