1. [Spot Exchange Rate] (a) We trade in two currencies: alpha (a) and beta ([7). Assume 1 alpha buys you 1.25 betas. Assume that there is no bidask spread, that is, 1.25 betas buys you 1 alpha. How may alphas do you need to but 1 beta? What are the spot rates Xb/a and Xa/b ? (b) Suppose that in a year's time 1 alpha buys you 1.2 betas. What happens to Xb/a and X" /1.? Which currency has appreciated and which currencv has depreciated