Assuming the following information are available for Australia and Malaysia:

a. Does IRP hold? b. According to PPP, what is the expected spot rate of the Malaysian ringgit in one year? c. According to the IFE, what is the expected spot rate of the Malaysian ringgit in one year? d. Reconcile your answers to parts (a). and (c).

Australia 4% 2% Nominal interest rate Expected inflation Spot rate One-year forward rate Malaysia 6% 5% A$0.37 A$0.3401