3. Suppose annual interest rates are 1% in Japan and 6% in New Zealand and the New Zealand dollar (NZ$) is worth 78.50. You execute a FX carry trade and have a 90-day investment horizon. (a) [6 pts] Does UIP predict an appreciation or depreciation of the Japanese yen over the quarter? By how much, approximately? (b) [7 pts] What is the expected spot rate 90 days from now under UIP? (c) [7 pts] Over the quarter, the Japanese yen depreciates by 1.25%. Did you make a profit or loss on the carry trade? Quantify the excess return on the carry trade