Exercise 1 Suppose the US interest rate (ins) is 6%, while the Japanese interest rate (iy) is 1%. The nominal exchange rate is 0.01$ = 1Y and the expected nominal exchange rate is 0.011$ = 1Y. (a) How many $ will an American investor expect to obtain after one year for every $ invested in Japanese bonds? (b) Will he prefer to invest in American or Japanese bonds? (c) How many Y will a Japanese investor expect to obtain after one year for every Y invested in American bonds? (d) Will he prefer to invest in American or Japanese bonds? (e) What is the expected depreciation rate of the $? (f) Show that the data in this exercise is not consistent with the interest rate parity condition