IRP The one$-$year risk$-$free interest rate in Mexico is $10$ percent. The one$-$year risk$-$free rate in the United States is $2$ percent. Assume that interest rate parity exists. The spot rate of the Mexican peso is $$0\mathrm{.}14.$

a$.$ What is the forward rate premium?

b$.$ What is the one$-$year forward rate of the peso?

c$.$ Based on the IFE, what is the expected change in the spot rate over the next year?

d$.$ If the spot rate changes as expected according to the IFE, what will be the spot rate in one year?

e$.$ Compare your answers to $($b$)$ and $($d$)$ and explain the relationship.