Question Completion Status: Question 1 of 2 Moving to the next question prevents changes to this answer. 5 points Save Answer Question 1 If we assume that capital markets of the UK and US are integrated and investors in both the U.S. and UK require the same real interest rate, 5%, on their lending. There is a consensus in capital markets that the annual inflation rate is likely to be 8% in the US and 4% in the UK for the next three years. The spot exchange rate is currently $3/. a. Compute the nominal interest rate per annum in both the US and UK, assuming that the Fisher effect holds. b. What is your expected future spot dollar-pound exchange rate in three years from now? c. Can you infer the forward dollar-pound exchange rate for one-year maturity? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). B I US Arial Paragraph TX 10pt ... V Ili V