Assume the following information is available for the U.S. and Europe where the U.S. is the home country and assume 360 days in a year. U.S. Europe Nominal interest rate per annum (1) 18.8% 8% Expected inflation rate per annum (I) 15.5% 5% Spot rate (S) for US$/euro $1.00/ 180-day forward rate (F) for US$/euro $1.05/ (a) Based on the actual spot and forward rates given, what is the "actual forward premium/discount on euro on an annualized basis? (4 marks) (b) According to Interest Rate Parity (IRP) and based on the actual nominal interest rates given, (1) what should be the forward premium/discount on euro on an annualized basis? (4 marks) (2) what should be the 180-day forward rate for US$/euro? (4 marks) (c) Does Interest Rate Parity hold? Briefly explain your answer in one sentence based on your answers to parts (a) and (b) above. (4 marks) (d) According to Purchasing Power Parity (PPP), (1) what is the expected change in the spot rate of euro against dollar in one year? (4 marks) (2) what is the expected spot rate of the euro ($/) in one year? (2 marks) Assume the following information is available for the U.S. and Europe where the U.S. is the home country and assume 360 days in a year. U.S. Europe Nominal interest rate per annum (1) 18.8% 8% Expected inflation rate per annum (I) 15.5% 5% Spot rate (S) for US$/euro $1.00/ 180-day forward rate (F) for US$/euro $1.05/ (a) Based on the actual spot and forward rates given, what is the "actual forward premium/discount on euro on an annualized basis? (4 marks) (b) According to Interest Rate Parity (IRP) and based on the actual nominal interest rates given, (1) what should be the forward premium/discount on euro on an annualized basis? (4 marks) (2) what should be the 180-day forward rate for US$/euro? (4 marks) (c) Does Interest Rate Parity hold? Briefly explain your answer in one sentence based on your answers to parts (a) and (b) above. (4 marks) (d) According to Purchasing Power Parity (PPP), (1) what is the expected change in the spot rate of euro against dollar in one year? (4 marks) (2) what is the expected spot rate of the euro ($/) in one year? (2 marks)