64.[One Point] Suppose that over the next three years, the inflation rate in Great Britain is expected to be 3% (year one), 5% (year 2), and 7% (year 3). The inflation rate in U.S.A is expected to be 4.5% in year 1, 3% in year 2, and 6% in year 3. If the current spot rate is 1 - $1.58, what is the expected spot rate in year three? Facts: Calculations: SM - $1,0800-25 BID 7*.[Three Points] Consider the following prices in the international money markets: for Burry Spot rate for 90-day Forward rate for = $1.0000-15 Interest rate in Europe (r) = Deposits = 4%, Borrowing = 5% per year (all rates are APR) Interest rate in U.S. (1) = Deposit = 1%, Borrowing = 2% per year (all rates are APR) und Assuming you don't have money but can borrow one million units of either currency, how can you profit in the above situation? Describe the flows and show all calculations. (Please do not round numbers--use 6 decimals) Answer: 8.[One Point] A market basket of consumer goods cost 520 in Germany and 450 in England. Calculate the PPP exchange rate for . Facts