3. Assume that the interest rate on a one-year insured U.S. bank deposit is 4%, and the interest rate on a 1-year insured Swedish bank deposit is 2.5%.

a. (4 points) Using the simplified formula, for the actual returns of these two investments to be similar from the perspective of investors in the United States country, by how much (as a percentage) does the Swedish currency have to change over the investment horizon?

b. (4 points) Using the full formula, for the actual returns of these two investments to be similar from the perspective of investors in the United States country, by how much (as a percentage) does the Swedish currency have to change over the investment horizon?