3. a. Suppose that the South African interest rate is 6% and the U.S. interest rate is 4%. If the expected future spot exchange rate one year from now is 12.05 Rand per dollar and uncovered interest rate parity holds, what must the current spot exchange rate be in order to clear the foreign exchange market?

b. Suppose that the expected future spot rate changes to 12.45 rather than 12.05. How does that alter the equilibrium exchange rate compared to that in part (a)? Explain the economic reasoning why the shift in expectations about the future affects the current equilibrium value of the exchange rate today.

c. What would be the equilibrium value of the forward exchange rate, given the information and result in part (b) above, and assuming that covered as well as uncovered interest rate parity hold?

d. Suppose the current spot and forward rates are 12.15 and 12.20. What sequence of trades could you execute to earn an infinite profit? How large is your profit per dollar traded?

e. Suppose the trader in part (d) is unable to purchase a forward contract, but still executes the same trades. Under what circumstances would they lose money?

need help with part d and e. Thanks