a. Apply your in-depth concepts and illustrate five fundamental parity relations simultaneously, in equilibrium, using exchange rate of U.S. dollar and the Japanese yen: The forecasted inflation rates for Japan and the United States are 1% and 5%, respectively; a 4% differential. The nominal interest rate in the U.S. dollar market (1-year government security) is 8%, a differential of 4% over the Japanese nominal interest rate of 4%. The spot rate Si is 104/$. and the 1-year forward rate is 1100/$. (10 marks) a. Apply your in-depth concepts and illustrate five fundamental parity relations simultaneously, in equilibrium, using exchange rate of U.S. dollar and the Japanese yen: The forecasted inflation rates for Japan and the United States are 1% and 5%, respectively; a 4% differential. The nominal interest rate in the U.S. dollar market (1-year government security) is 8%, a differential of 4% over the Japanese nominal interest rate of 4%. The spot rate Si is 104/$. and the 1-year forward rate is 1100/$. (10 marks)