Country	Forecasted Change in Consumer Prices	3-Month Interest Rates	1-Year Government Bond Rates	Spot Exchange Rate (per US $)
Australia	2.4%	6.90%	6.23%	1.12
Japan	0%	0.73%	1.65%	117
USA	2.8%	4.72%	4.54%	1.00

Use the information provided in the above Table to answer the following three questions:

1. Assuming Purchasing Power Parity, and assuming that the forecasted change in consumer prices is a good proxy of predicted inflation, forecast the following exchange rates:

1. Japanese Yen / US Dollar in one year
2. Japanese Yen / Australian Dollar in one year
3. Australian Dollar / US Dollar in one year

2. Assuming International Fischer applies to the coming year, forecast the following future spot exchange rate using the government bond rates for the following exchange rates:

1. Japanese Yen / US Dollar in one year
2. Japanese Yen / Australian Dollar in one year
3. Australian Dollar / US Dollar in one year

Country Forecasted Change in Consumer Prices 3-Month Interest Ratese Spot Exchange Rate (per US S) 1-Year Government Bond Rates 6.23% 1.65% 4.54% Australia Japane USA 2.4% 0% 2.8% 6.90% 0.73% 4.72% 1.12 1174 1.00 - Use the information provided in the above Table to answer the following three q 1) Assuming Purchasing Power Parity, and assuming that the forecasted change in consumer prices is a good proxy of predicted inflation, forecast the following exchange rates: a. Japanese Yen / US Dollar in one year b. Japanese Yen / Australian Dollar in one year c. Australian Dollar / US Dollar in one year 2) Assuming International Fischer applies to the coming year, forecast the following future spot exchange rate using the government bond rates for the following exchange rates: a. Japanese Yen / US Dollar in one year b.Japanese Yen / Australian Dollar in one year c. Australian Dollar / US Dollar in one year 3) Using the spot rates and 3-month interest rates, calculate the 90-day forward rates for: a. Japanese Yen / US Dollar in one yearly b.Japanese Yen / Australian Dollar in one year c. Australian Dollar / US Dollar in one year