1. What is the difference between the ex ante and the ex post real interest rate?

2. Suppose that the international parity conditions all hold and a country has a higher nominal inter- est rate than the United States. Characterize the forward premium (or discount) on the dollar, the country's inflation rate compared to the United States, the expected rate of currency appreciation or depreciation versus the dollar, and the coun- try's real interest rate compared to the U.S. real interest rate.

3. How do fundamental analysis and technical analysis differ?

4. Would technical analysis be useful if the international parity conditions held? Why or why not?

5. Describe three statistics you should obtain from a currency-forecasting service in order to judge the quality of its currency forecasts.

6. Does a large increase in the domestic money supply always lead to a depreciation of the currency?