The inflation rate in the U.K. is 0.5, while the inflation rate in France is 0.8. The current exchange rate for the Euro is 1.2. Also, suppose the current real interest rate is 5 percent. After supply and demand for the Euro has adjusted in the manner suggested by purchasing power parity. What is the new exchange rate for the Euros? suppose the home currency is Euros. Answer: Assume the Yen is worth 1, and the Frank is worth 0.8. Also, the Canadian dollar is .8. What is the value of the Frank in Yen? Answer: Assume that the Euros has an annual interest rate of 0.5 and is expected to appreciate by 0.8 against the dollar. What is the effective financing rate from borrowing Euros