Solve the following problems according to the instructions in the module assignment. 1. The following exchange rates were published in todays paper Fictional Exchange Rate Press. $1 is equal to 5.00 Widgetstan baht (WB) 1 Widgetstan baht = 0.80 Dudeandgal pesos (DP) You want to purchase 100,000 Dudeandgal pesos with U.S. dollars. How many U.S. dollars will you need for your purchase?

2. You believe in purchasing power parity. In your analysis, you assume locational arbitrage guarantees spot exchange rates are properly aligned. The spot rate of the British pound is $1.80. The spot rate of the Swiss franc is 0.3 pounds. Your inflation expectations are 7 percent in the United Kingdom, 5 percent in Switzerland, and 2 percent in the United States. One-year interest rates are 6 percent in the United Kingdom, 2 percent in Switzerland, and 4 percent in the United States. What is your expected spot rate of the Swiss franc in one year with respect to the United States dollar?