5 Uncovered vs Covered Interest Rate Parity. [5 points] In June 2006, a Brazilian investor is considering investing in bank deposits in Brazil and Canada. The annual interest rate on Brazilian deposits 6.25%, versus 3.75% on deposits in Canada. Suppose that the forward rate in June 2006 is equal to Reales/CAD 8.2. In June 2006, the expected exchange rate for delivery in Jun 2007 is 8.25 Reales/CAD. For the remainder of this question, please use the linear approximations for uncovered and covered interest rate parity. The spot exchange rate in June 2006 is Reales/CAD-8 a Does covered interest parity hold in this example? If so, how do you know? 12 points b Does uncovered interest parity hold in this example? If so, how do you know? If not, what is the implied risk premium? Which deposits pay a higher expected ret urn?[2 points