Purchasing Power Parity theory posits that exchange rates adjust to inflation differences. Annual price inflation for the next four years in Norway is forecast at 3.0% 3.2% 2.7% 2.8% Annual price inflation for the next four years in Europe is forecast at 6.0% 7.0% 6.2% 6.4% The Spot exchange rate is at > .11 Euro/kr PPP 252 days If the annual interest rate in USA is presently 3.0% If the annual interest rate in U Kingdom is presently 6.0% IRP > 252 days Pds Prem Disc Use the forward rate calculated in the problem above. 7pts Calculate the % forward rate premium (or discount) for the U Kingdom Pds NOTE: the currency whose forward exchange rate shows strengthening is at premium. Pds Fill in 1 >