Let i and j denote the domestic and foreign interest rates, respectively. Let S_1 denote the spot nominal exchanges rate, which is the number of units of the domestic currency needed to purchase on e unit of the foreign currency today, let F_1 denote the forward exchange rate today, and let S_2 denote the spot rate one time period from now. a Distinguish between covered and uncovered interest rate parties and explain whether each one tends to hold in the data. b. Suppose the annual nominal interest rate in the US is 6%, and the annual nominal interest rate in Germany is 2%. The spot exchange rate today is $0.5 per Euro and the 1-year Forward rate is $0.5196 per Euro. i. Does covered interest parity hold in this cast? Example. ii. What should be expected future spot exchange rate for uncovered interest parity to hold in this case? c. Briefly explain how one could design a carry trade strategy to earn excess returns in forex markets. d. Does a high and positive correlation between national saving and national investment imply that capital mobility must be low? Explain