Problem 1.(70 points) Suppose you would like to put S1 either in a US bank or in a bank in Russia, to collect your return in one year. You are trying to decide which investment is more profitable. Interest rate on dollar deposits is is, whereas interest rate on deposits in Russian rubles is ip. Suppose you know the spot exchange rate, Es p. You also formed expectations about what the exchange rate might be in a year, Esp Now you need to compare returns on two investments. 1. Compute return on dollar investment: How many dollars would you get in a year time if you put money on a dollar deposit? 2. Compute return on ruble investment: (a) Convert your $1 into rubles. How many rubles would you have? (use Es p to answer) b) Now suppose you put the amount of rubles you obtained in the previous step on a ruble deposit. How many rubles would you get back at the end of the year? (c) Now convert the amount of rubles you obtained in the previous step back into dollars, using expected exchange rate Es p