At the beginning of the year the exchange rate between the Brazilian Real and the U$.$S$.$ dollar is $3$ Reals per dollar. Over the year, Brazilian inflation is $10\%$ and U$.$S$.$ inflation is $4\%.$ If parity holds, at one$-$ year$-$end the exchange rate should be dollars per real. $(5$point$)$

A$)0\mathrm{.}2799$

B$),0\mathrm{.}3327$

C$)2\mathrm{.}8498$

D$)0\mathrm{.}3145$

E$)0\mathrm{.}3035$

If the interest rate in the United Kingdom is $8\%,$ the interest rate in the US is $10\%,$ the spot exchange rate $$\frac{1\mathrm{.}75}{},$ and interest rate parity holds, what must be the two$-$year forward exchange rate. $?(6$point$)$

You buy a stock for $$10$ per share and sell it for $$12$ after holding it for slightly over a year and collecting a $$0\mathrm{.}50$ per share dividend. Your rate of return is

$(5$point$)$

A$)\frac{18}{1}\%$

B$)19\mathrm{.}6\%$

C$)25\mathrm{.}0\%$

D$)20\mathrm{.}2\%$

E$)17\mathrm{.}4\%$

You can buy or sell the $$ spot at $$1\mathrm{.}98$ to the pound. You can buy or sell the pound $1$ year forward at $$2\mathrm{.}01$ to the pound. If U$.$S$.$ annual interest rates are $5\%,$ what must be the approximate one$-$year British interest rate if interest rate parity holds? $(7$ point$)$

$)4\mathrm{.}00\%$

B$)5\mathrm{.}25\%$

C$)2\mathrm{.}75\%$

D$)3\mathrm{.}48\%$

E$)652\%$