4- Money and foreign exchange markets in London and New York are very efficient. The following information is available: London New York Spot exchange rate ($/) 1.3860 1.3860 One-year treasury-bill rate 3.8% 4.2% Expected inflation rate unknown 2% (a). What do the financial markets suggest for inflation in Europe next year? (Use Generalized Fisher Effect) (b). Estimate today's one-year forward exchange rate between the dollar and the euro? (Use Interest Rate Parity) (c). Estimate the expected future spot exchange rate one year from now given the above (Use International Fisher Effect) 4- Money and foreign exchange markets in London and New York are very efficient. The following information is available: London New York Spot exchange rate ($/) 1.3860 1.3860 One-year treasury-bill rate 3.8% 4.2% Expected inflation rate unknown 2% (a). What do the financial markets suggest for inflation in Europe next year? (Use Generalized Fisher Effect) (b). Estimate today's one-year forward exchange rate between the dollar and the euro? (Use Interest Rate Parity) (c). Estimate the expected future spot exchange rate one year from now given the above (Use International Fisher Effect)