Q 19 and Q 20 are linked.

Q 19 and Q 20 (combined). You are given the following data correct as of today:

The South African interest-rate for the next one year is 12%.

The British interest-rate for the next one year is 2%.

The spot exchange rate for the number of South African Rand per British Pound today is 20.4000.

Assume that the International Fisher Effect (IFE) holds.

What is your best guess (i.e., best prediction or, more formally, what is an unbiased prediction) of what the spot exchange rate for the number of South African Rand per British Pound will be one year from now.

Q 19: Use the formal equation (no approximation) given in the slides.

Give the answer to one decimal place.

Q 20: Repeat the calculation of Q 19, but, this time, use the approximate formula that allows for an "in your head" calculation. Again, give the answer to one decimal place.