Financial Homework 1Question Description Directions:Answer the following questions on a separate document. Explain how youreached the answer or show your work if a mathematical calculation isneeded, or both. Submit your assignment using the assignment link above.This homework assignment is worth 20 points. Responses should be at least 75 words for each question. 1) Would you characterize the U.S. dollar as a freely floating or dirty float system? What characteristics support your answer? 2) What is direct central bank intervention in the currency markets and provide an example of this from the last 50 years. 3)Assume that Canada suddenly experiences high inflation. How might thisaffect the value of the Canadian dollar according to the purchasingpower parity (PPP) theory? 4)Australia’s central bank decides to increase the value of theAustralian dollar against the Japanese yen. How might it use directintervention to do this? 5) Assume the following information: Mexican one-year interest rate = 15% U.S. one-year interest rate = 11% Ifinterest rate parity exists, what would be the forward premium ordiscount on the Mexican pesos forward rate? Would covered interestarbitrage be more profitable to U.S. investors than investing at home?Explain. 6) Create a balance sheet for a typical bank, showing its main liabilities (sources of funds) and assets (uses of funds). 7)The Federal Reserve has increasingly favored the use of RepurchaseAgreements as part of its open market operations. Briefly describethese and why the Fed or banks prefer to use them. 8)Banks engage in proprietary trading as part of their operations.Briefly speculate on why they now must adhere to much more stringenttrading activity as a result of the 2008-09 financial crises. 9) Briefly describe two off-balance sheet activities and why banks favor the use of these. 10)If you were the CEO of a US bank, would you consider establishing aforeign branch? What might be a concern related to doing so?