1. (one point) Using the uncovered interest parity, if the return on United States dollar deposits (i_$) is 0.5%, the expected dollar-peso exchange rate (E^e_$/MP) is $0.04 per peso, and dollar-peso spot rate(E_$/MP) is $0.05, what is the return on peso deposits (i_MP)? (Hint: When you're doing the calculations, convert the peso interest rate into a decimal [i.e., 0.005]. Once you have your answer, convert it back to a percentage.)

2. (two points) A Samsung Galaxy S22 Ultra costs 1200 in France. The same phone costs $1400 in the United States. The spot dollar-euro exchange rate is E_$/ = $1.10. (To simplify things, we are not including transaction costs.)

1. Calculate the real exchange rate using the prices given and the LOOP.
2. Do the prices for the phone suggest that the dollar under or overvalued in the spot market?
3. If so, by how much? Report the under or overvaluation as a percentage to one decimal place.