Question: Discuss difference between nominal interest rate and real interest rate. Explain why real interest rate is more important than the nominal interest rate using

Discuss difference between nominal interest rate and real interest rate.

Explain why real interest rate is more important than the nominal interest rate using your answer to Question 1 of the numerical portion above.

Discuss the main difference between forward and future spot exchange rates.

Discuss whether the forward rates predict the future spot rate using your answers to Question 2 and Question 3 of the numerical portion above.

Describe how interest rate parity affects exchange rates.

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