1. Suppose that you are considering whether to put your $900 savings into a U.S. bank account or in a British bank account for the next year. You must evaluate the expected rate of return from these two investment strategies. The return on the U.S. deposits is equal to one plus the U.S. interest rate (1 is). This is the gross dollar return that you receive from your investment at the end of one year. Suppose s is 0.1968%. The return on the British deposits includes two components. You receive one plus the British interest rate (1 + 1) as gross pound return after one year. Suppose is i 0.535%. This gain or loss is determined by the forward exchange rate, Fs/e (1.5452), and the current spot rate, Ese (1.55042). (1) If you convert your $900 savings into British pounds today, how much could you have in British pounds? (2) If you deposit it in a British bank account for the next year, how much will you (3) If you convert above calculated British pounds back to U.S. dollars, how much will (4) If you just deposit your $900 savings into a U.S. bank account, how much will she (5) Compare your answer of (3) and (4), do you think the covered interest parity have in British pounds one year from today? you have in U.S. dollars one year from today? have in U.S. dollars one year from today? condition (CIP) holds here