Assume that the following information is available as of today US Mexico Real Interest Rate 2 2 Nominal Interest Rate 12 Spot Rate $0 052 One Year Forward Rate $0 050 1 Using the relative form of PPP, compute the difference between the expected rate of inflation of U S and that of Mexico (10 points) 2 Using IFE, compute the nominal interest rate of U S

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Assume that the following information is available as of today. US Mexico Real Interest Rate 2% 2% Nominal Interest Rate - 12% Spot Rate -

Assume that the following information is available as of today.

	US	Mexico
Real Interest Rate	2%	2%
Nominal Interest Rate	-	12%
Spot Rate	-	$0.052
One Year Forward Rate	-	$0.050

1. Using the relative form of PPP, compute the difference between the expected rate of inflation of U.S. and that of Mexico. (10 points)

2. Using IFE, compute the nominal interest rate of U.S.

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