Question: (1) Write out the uncovered interest parity condition, which is the equilibrium condition in the bonds market. (5%) (2) The equilibrium exchange rate can be

(1) Write out the uncovered interest parity condition, which is the equilibrium condition in the bonds market. (5%) (2) The equilibrium exchange rate can be inferred from the interest parity condition. Suppose the Federal Reserve is holding R = 3.6%, while the European Central Bank is holding R* = 3.2%; and suppose the expected future exchange rate is one dollar for one euro. What is the current equilibrium exchange rate? (5%)Suppose the current exchange rate is actually one dollar

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