Question: The current spot exchange rate is S0$/ = $1.10/ and the one-year forward rate is F1$/ = $1.11/. The prime rate in the United States

The current spot is S0$/€ = $1.10/€ and the one-year forward rate is F1$/€ = $1.11/€. The prime rate in the United States is 5 percent.
a. What is the prime rate in euros if the international parity conditions hold?
b. According to forward parity, by how much should the euro change in value during the next year?
c. By how much should the dollar change in value during the next year?
d. If this forward premium persists into the future, what should be the euro's value in five years?

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