Question 6 Beth Miller does not believe that the international Fisher effect {IFE} holds. Current oneyear interest rates ll'l Europe are 5 per cent, while oneyear interest rates in Australia are 3 per cent. Eleth convertsA l to euros and invests them in Germany. Cine year later, she converls the euros back to Australian dollars. The current spot rate of the euro is A 1.35. a. According to the IFE, what should the spot rate of the euro in one year be? b. If the spot rate ofthe euro in one year is A 130, what is Beth's percentage return from her strategy? c. If the spot rate of the euro in one year is A 1.15, what is Beth's percentage return from her strategy? d. What must the spot rate of the euro he in one year for Beth's strategy to be successful? 20 marks {5 each]