Problem #1 Given the information below and assuming efficient markets in Canada and the U.S., answer the following questions: a. What do the financial markets suggest for inflation in Canada next year? b. Estimate today's one-year forward exchange rate between the US dollar and Canadian dollar. Assumptions Canada USA Spot exchange rate (C$/$) One-year Treasury bill rate Expected inflation rate 1.3264 3.600% Unknown 1.3264 4.200% 1.300%