#5 Consider a Dutch investor with 1.500 euros to place in a bank deposit in either the Netherlands or Great Britain. The {one-year) interest rate on bank deposits is 2% in Britain and 4.54% in the Netherlands. The {one-year) forward europound exchange rate is 1.575 euros per pound and the spot rate is 1.5 euros per pound. Answer the following questions. using the exact equations for UIP and CIF as necessary. a. What is the euro-denominated return on Dutch deposits for this investor? b. What is the (riskless) euro-denominated retum on British deposits for this investor using forward oover? C. Is there an arbitrage opportunity here? Explain why or why not. Is this an equilibrium in the forward exchange rate market? d. If the spot rate is 1.5 euros per pound, and interest rates are as stated previously. what is the equilibrium forward rate, according to CIF? 9. Suppose the forward rate is the value given by your answer to (d). Calculate the forward premium on the British pound for the Dutch investor (where exchange rates are in euros per pound}. Is it positive or negative? Why do investors require this premiumfdisoount in equilibrium? 1'. If UIP holds. what is the expected depreciation of the euro against the pound over one year? 9. Bo. based on f., what is the expected value of the euro-pound exchange rate one year ahead