1301 5. Two countries, the Brazil. produce wheat in the U.S. is $2.00 per bushel and in Brara (1) According to purchasing parity. be U.s, and Bravil, produce just one good, wheat. Suppose the price of Brazil real? power parity, what should be the current spot rate betwecn dollar and (2) Suppose the price of wheat over the next year is increase 2% in Brazil. Wha expected to increase by 1% in the US, and t should be the one-year real dollar forward rate? (3) Given your answers to (1) and (2), and given the current interest rate in the US is 05%% for notes of a one-year maturity, what would you expect current the interest rate in Brazil to be? 120] 6. Money and foreign exchange markets in Japan and Switzerland are quite efficient. You have the following information Spot exchange rate Expected inflation rate Nominal interest rate UK CHF1.52/BP 1.5% pa Unknown Switzerland BP0.6579 CHF 0.8% pa 2.5% pa (1) What is your estimate of the nominal interest rate in UK? 2) What is your estimate of the one-year forward exchange rate between Swiss frane and British ound