Question 3 only.

3) Considering questions 1 and 2 above, what underlying theory did you use to make your calculations? Briefly explain why it is important for managers to know and understand this theory. Assume the following: Spot USDBRL = 5.7500 6MO USD Money Market Rates = 0.50% 6MO BRL Money Market Rates = 9.00% What is the 6MO USDBRL forward rate? (Recall that Money Market Rates are quoted as annualized rates) Assume the following: Spot GBPUSD = 1.3800 12MO GBP Money Market Rates = 1.50% 12MO USD Money Market Rates = 0.75% What is the 12MO GBP/USD forward rate? (Recall that Money Market Rates are quoted as annualized rate)