Jill Miden does not believe the IFE holds. Current on-year interest rates in Europe are 5 percents, whereas one-year interest rates in the U.S. are 3%. Jill converts $100,000 to euros and invests them in Germany. One year later, she converts the euros back to dollars. The current spot rate of the euro is $1.10.

(a) According to the IFE, what should the spot rate of the euro in one year be?

(b) If the spot rate of the euro in one year is $1.00, what is Beth's percentage return from her strategy?