b$.$ Suppose that SFF forecasts are accurate for the next year $($same as in part a$),$ however

they are less reliable for longer horizons. Instead you use a na$$ve random walk model to forecast inflation beyond one year $($year $2$ to year $5).$ Note that inflation follows a random walk, not the consumer price index! Based on the purchasing power parity $($PPP$)$ relation, what would be CNY$/$EUR exchange rate estimate over five years, if the current spot rate is $7\mathrm{.}6381?$ Compare your results to the forecasts obtained in part a$).$

c$.$ Describe the Fisher Hypothesis and show what it implies under the assumption that both PPP and UIP parity relations hold.