Consider two one-year bonds (Australian government bond and US Treasury bond) which pay the face value of the bond a year from now. These two bonds are issued in two different currencies, AUD and USD. E is the exchange rate between the two currencies. Today E - 1.4 AUD per USD. The face values and the prices on the two bonds are given by Face Value Price United States USD 8,000 USD 7.766.99 AUD 7,547.17 Australia AUD 8,000 a. Compute the nominal interest rate on each of the bonds. Answer: The interest rate on the US Treasury bond ius - Select] %. The interest rate on the Australian gov't bondinu = [Select] b. Compute the expected appreciation rate of USD and the expected exchange rate next year consistent with uncovered interest rate parity. Answer: The expected appreciation of USD = (Select] %. E = [Select) c. If you expect USD to appreciate by 4% in the coming year, which bond should you buy? Answer: [Select] d. If you expect E = 1.42 in the coming year, which bond should you buy