I just wanna know the whole answers for this assignment.

MGT 237: INTERNATIONAL FINANCIAL MANAGEMENT ASSIGNMENT 2 PROBLEM I (30 points) Suppose the quarterly (90-day) interest rate in the US is 2.5% and it is 4% in Canada. If the $/CD spot exchange rate is $0.80/CD and the 90-day forward exchange rate between US and Canadian dollars is $0.79/CD , does the interest rate parity (IRP) hold? Why or why not? If it does not hold, what is the direction of the capital flow? If an arbitrageur can borrow up to $1,000,000 (or CD1,250,000), formulate a covered interest arbitrage. Make sure to explain your steps in detail (just writing out three random calculations does not count). Determine the amount of arbitrage profit. For interest rate parity (IRP) to hold, what should the correct forward exchange rate be? PROBLEM II: (20 points) Given the following information, is triangular arbitrage possible? If so detail the steps necessary to carry out triangular arbitrage and compute the profit from this strategy if the arbitrageur had 1,000,000 to use. Value of a dollar in Japan Value of a dollar in Sweden Value of a Krona in Japan 129.87 SKr 2.00 65.00 PROBLEM III: (10 points) The $/CD spot exchange rate is $0.85/CD and it is expected to decrease to $0.80/CD in a year. If the expected inflation rate in Canada is 4% , what should the expected inflation rate be in the US? __________________________ PROBLEM IV: (10 points) The Australian dollar spot exchange rate is $0.90/AUD. If the semi-annual interest rates in Australia and the U.S. are 5% and 3%, respectively, what should the $/AUD exchange rate be in six months? ___________________________ PROBLEM V: (15 points) If the annual inflation rate is 3.5 percent in the United States and 2 percent in the U.K., and the dollar depreciated against the pound by 2.5 percent, then the real exchange rate, assuming that PPP initially held, is: ________________________________ What can you conclude about the competitiveness of the US economy after this depreciation in dollars? (Did competitiveness improve, deteriorate or remain unchanged?) Why? PROBLEM VI: (15 points) If the price of a Big Mac is $3.49 in the US and YTL 5.17 in Turkey, According to law of one price, what should the TL/$ exchange rate be? ________________________ If the actual exchange rate quoted in Dunya (the primary financial news source in Turkey) is YTL1.2590/$, is the Turkish Lira, overvalued or undervalued? Why