Assume the spot Yen/Euro exchange rate is ¥130/€ and the one year forward exchange rate is ¥125/€
(I) Over the next year the Euro is expected to appreciate against the Yen.
(II) Japanese imports to Europe should increase as a result.
a. (I) is true; (II) is false
b. (I) is false; (II) is true
c. Both statements are true
d. Both statements are false