An investor is considering investing in one-year zero-coupon bonds. She is thinking of investing in either a British-pound-denominated bond with a yield of 5.2 percent or a euro-denominated bond with a yield of 4.5 percent. The current exchange rate is 1.5408 per .

1. What exchange rate one year later is the break-even exchange rate, which would make the pound and euro investments equally good?
2. Which investment would have turned out to be better if the actual exchange rate one year later is 1.4120 per ?