31. Which 31. Which one of the following market conditions will produce a profit for a hedge-tund manager that is planning to borrow in UK and invest in the US. One could answer this question without a calculator Interest Rate in US Interest Rate in UK | Expected Annual Percentage Change in the Direct Quote for the British Pound 15% -7% 5% +7% 5% +8% 15% -3% Market Condition 1 Market Condition 2 Market Condition 3 Market Condition 4 10% 10% 10% 10% a. Market Condition 1 b. Market Condition 2 c. Market Condition 3 d. Market Condition 4 32. Suppose the expectations for 2020 are as follows: inflation rate in US will be 3%, inflation rate in Mexico will be 18%, and the indirect quote for Mexican pesos (MXN/USD) will increase by 10%. Based on the above projections, according to PPP, the expected profits for a a. US firm exporting to Mexico will likely increase b. US firm importing from Mexico will likely increase c. Mexican firm exporting to the US will likely increase d. Mexican firm importing from the US will likely decrease 33. According to the International Fisher Effect has an effect on a. the difference between the domestic and foreign interest rates; the percentage difference between the current spot exchange rate and future spot exchange rate b. the sum of the real rate and inflation premium; the nominal rate of interest c. the difference between the real rate and inflation premium;; the nominal rate of interest. d. the difference between the domestic and foreign interest rates; the forward premium or discount e. the difference between the domestic and foreign inflation rates; the forward premium or discount