Use the table below to answer the following a. Fill in the missing values in the table. b. If you convert $100 two Euros at the FX rate above, what am your proceeds? c. If you convert SK 500 into U.S. Dollars at the FX rate above, what are your proceeds? d. If you purchase a Turkish rug for TL 2,000, how much does it cost in U.S. dollars? e. You believe that the direct FX rate for the U.K, pound will be $1.2622 m six months. Are you expecting an appreciation or depreciation of the pound? What about the U.S. dollar? What is the difference between buying or selling in the spot versus the forward FX market? Why might a person want to buy or sell currency in the forward market instead of the spot market? Suppose you must repay pound 1,000 in 3 months. a. Why is this a riskier proposition than owing U.S. dollars for you? b. Suppose the direct 3-month forward FX rate for the U.K. pound is 1.25. What are your alternatives for eliminating your foreign exchange exposure? A basket of goods in the U.S. costs $100 and the same basket of goods costs yen 10, 500. a. According to PPP what should the direct and indirect spot FX rates be between the U.S dollar and the Japanese yen? b. Suppose inflation in the U.S. is expected to lead to an increase in the price of the U.S. basket by 4% and inflation in Japan is expected increase the Japanese price by 1%. What should the direct and indirect spot FX rates be in one year? c. Use the equation S_ = S_0 [1 + (h_FC- h_HC)]^to forecast the exchange rate in 1 year. Suppose the inflation rate in the U.S. is 4% and the inflation rate in Japan is 1%. a. If the real risk free rate is 1.5% what should the nominal rates on T-bills in the U.S. and Japan be according to the Fisher Equation. b. Show that the difference in the nominal interest rates in the two countries equals the difference in the inflation rates. c. The U.S. indirect exchange rate for yen is 105. Use the uncovered interest rate parity equation - S_t = S_0 (1 + (R_FC - R_HC)]^- to forecast the exchange rate one year and two years from now