Exercise 10.1 (TFU) Indicate whether the statement is true, false, or uncertain and explain why. 1. If there is free capital mobility between the United States and Ger many, then dollar deposits in New York and Frankfurt should have the same interest rate. 2. 1f uncovered interest rate parity holds, then returns to carry trade must be zero not only on average but period by period. 3. The interest rate in Japan is 0 percent and the interest rate in the United States is 1.75 percent. There is clearly an arbitrage oppor tunity, as one can become innitely rich without taking any risk by borrowing in yen and investing in dollars. 4. 1f the dollar is selling at a discount in the forward market, thgt 1, where 5; denotes the spot exchange rate [dollar price of foreign currency), F, is the forward exchange rate, and E3 is the expectations operator conditional on information available to speculators in period t