The international Fisher effect states that _____ rates are equal across countries.

The unbiased forward rate is a:    A.  condition where a future spot rate is equal to the current spot rate. B.  guarantee of a future spot rate at one point in time. C.  condition where the spot rate is expected to remain constant over a period of time. D.  relationship between the future spot rate of two currencies at an equivalent point in time. E.  predictor of the future spot rate at the equivalent point in time. Refer to section 21.4

40.

The forward rate market is dependent upon:    A.  current forward rates exceeding current spot rates. B.  current spot rates exceeding current forward rates over time. C.  current spot rates equaling current forward rates, on average, over time. D.  forward rates equaling the actual future spot rates on average over time. E.  current spot rates equaling the actual future spot rates on average over time. Refer to section 21.4

41.	Uncovered interest parity is defined as:    A.  E(St) = S0 × [1 + (hFC - hUS)]t. B.  E(St) = S0 × [1 + (RFC - RUS)]t. C.  E(St) = S0 × [1 - (RFC - RUS)]t. D.  E(St) = S0 × [1 + (RUS - RFC)]t. E.  E(St) = S0 × [1 + (RFC + RUS)]t. Refer to section 21.4

42.	The international Fisher effect states that _____ rates are equal across countries.    A.  spot B.  one-year future C.  nominal D.  inflation E.  real Refer to section 21.4

43.

The home currency approach:    A.  discounts all of a project's foreign cash flows using the current spot rate. B.  employs uncovered interest parity to project future exchange rates. C.  computes the net present value (NPV) of a project in the foreign currency and then converts that NPV into U.S. dollars. D.  utilizes the international Fisher effect to compute the NPV of foreign cash flows in the foreign currency. E.  utilizes the international Fisher effect to compute the relevant exchange rates needed to compute the NPV of foreign cash flows in U.S. dollars. Refer to section 21.5