5. Assume that the U.S. one-year interest rate is 2% and the one-year interest rate in Canads is 1%. You have $100,000 to invest and you believe that the international Fisher effect (IFE), same as Uncovered Interest Rate Parity, holds. The CAD's spot exchange rate is $0.90. What will be the (expected) dollar-equivalent yield on your investment, if you invest in CAD?

6. Given that the Big Mac in U.K. costs 2GBP and the Big Mac in U.S. costs 4USD. What should the exchange rate be (according to PPP, Purchasing Power Parity)?

7. Suppose: A Big Mac costs 4 dollars (USD) in U.S. A Big Mac costs 39 pesos (MXN) in Mexico And, you observe the spot exchange rate to be: 10MXN/$ Is the peso over- or under-valued?