5. Suppose the dollar/euro exchange rate falls from 1.07 to 1.05 to 1.03 to 1.02 to 1.00 dollars per euro, while the interest rate on euro deposits remains at 5%, calculate the expected dollar depreciation against the euro a year from now, if the expected dollar/euro exchange rate is given at 1.05 dollars per euro. Calculate also the dollar return on euro 5 deposits as the dollar/euro exchange rate falls from 1.07 to 1.05 to 1.03 to 1.02 to 1.00 dollars per euro. Draw the graph relating the dollar/euro exchange rate to the dollar return on euro deposits. Explain! Formula: R $ = R euro + (Ee $/euro -E $/euro) / E $/euro