1. Law of One Price
   1. The Chilean inflation rate is 11.6% and the US inflation rate is 4.1%. One year ago, the exchange rate was 0.011 USD per Chilean peso. If the Law of One Price holds, what would you expect the current USD per Chilean peso exchange rate to be?
   2. The CAD per EUR spot rate is currently CAD 1.46 per EUR. One-year Canadian government bonds currently pay 4%. Similar Euro bonds pay 3.5%. If the Law of One Price holds, what is the 1-year CAD per EUR forward rate?
   3. If the one year forward rate was different than the one you calculated in Part B, how could you use borrowing and lending CAD and EUR to take advantage of this situation?

Please show work