2. The interest rate on a one-year Mexican government bond, M, is 8.5%. The interest rate on its counterpart Canadian bond, iC, is 1.9%. The current exchange rate between the Canadian dollar and Mexican peso is CAD0.0700 = MXN1.0000. (a) What is the expected next-year exchange rate between the two cur- rencies that is consistent with the uncovered interest parity? (5 marks] (b) If the one-year forward exchange rate between the two currencies in the futures market is CAD0.0690 = MXN1.0000, what is the implied risk premium (in percent) that the market is asking from the Mexican government? (5 marks) Question 2 total marks: 10 Question 3 is on the next page