1. Discuss the forward market for foreign exchange. Include forward rates, cross-exchange rates, the forward premium, and long and short forward speculative positions. Briefly describe a Eurodollar futures hedge against falling interest rates.
2. Define the exchange rate. Compare fixed and floating rates. What arc managed rates? Which of these is most quickly affected by PPP (inflation). Is the textbook PPP the same as the classroom's monetary model's Pi and Pj? Explain the exchange rate system in existence today.