1. Suppose the 1-year nominal interest rate on the Korean won is 1.5% and on the U.S. dollar is 2%. The spot exchange rate is 1100 won per dollar. There is no risk premium. (a) Compute the expected won/dollar exchange rate one year from now (state your answer to two decimal places). (b) Suppose the interest rate on the U.S. dollar increases from 2% to 3% and the expected won/dollar exchange rate does not change (take the answer from (a) as the starting point). What happens to the spot won/dollar exchange rate (state your answer to two decimal places)? Does this correspond to an appreciation or a depreciation of the Korean won? 2. Suppose the interest rate in New Zealand is 0.01 and the interest rate in Costa Rica is 0.02. The New Zealand dollar (NZD) is expected to purchase 350 Costa Rican colon (CRC) in the future and the NZD has a risk premium of 0.01. What is the spot exchange rate that satisfies UIP (state your answer to two decimal places)? 3. Suppose the interest rate in Brazil is 0.04 and the interest rate in Mexico is 0.07. The Brazilian real (BRL) can purchase 4.5 Mexican pesos (MXN) in the spot market and is expected to purchase 5 units in the future. Based on UIP, which country has a riskier currency and what is the risk premium (state your answer to two decimal places)