Question: Show work please thank you ! For each question you should assume that covered and uncovered interest parity hold along with relative PPP. Question 1.

Show work please thank you ! Show work please thank you ! For each question you should assume

For each question you should assume that covered and uncovered interest parity hold along with relative PPP. Question 1. For this question you should assume that there are four economies - the U.S, the U.K, Canada and Europe. The US is the home economy. You are given the following information. The U.S interest rate is 0.08. U.K Canada Europe Interest Rate 0.05 0.15 Spot Exchange rate Forward rate 1.0 2.0 0.5 a. What is the spot exchange rate between the U.K and Canada where the U.K is the home country? b. What is the expected return for a US investor investing in Europe? Suppose that inflation in the US will be three percent. What is inflation in Canada? C. d. What is the real interest rate in Europe

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