'We start by testing uncovered interest rate parity. You are provided with quarterly data for the spot exchange rate USDIJPY in the period (11 1995 - Q4 2018. You can choose the convention that you prefer, either direct quote or indirect quote. Both are provided in the Excel attachment, together with quarterly data for interest rates for US and 3a pan. Interest rates have been computed from bonds at the following maturities: 3 months, 1 yea r, 3 years, 5 years and 10 yea rs. All interest rates that you nd in the Excel file are annual. Assume that the referenoe investor is American, i.e. the United States are the home country. We dene S; as the spot rate at time t, and we denote by s, the natural logarithm of the spot rate at time t, such that 3: = Inst. Run the following regression Assn: = a + 3 (it i3) + 8t+b where ASH], = 3m: st denotes the difference of the logarithm of the spot rate between t + k and t. We denote by it the interest rate in the domestic country, and by i; the interest rate in the foreign country, both at time 1". Run this regression separately for different values of k: 3 months, 1 year, 3 years, 5 years and 10 years. Please note that each regression needs consistency between the horizon of the interest rate differential and the horizon of the exchange rate depreciation f appreciation. In order to ensure consistency, please proceed as follows for the sake of simplicity, always keeping the interest rate differential at annual rates as provided in the Excel attachment: . For 14: equal to 3 months, compute an annualized spot exchange rate variation by multiplying 45m: by 4, since we have quarterly data. Afterwards, regress this 4 - As"; on (it ig). . For 1: equal to 1 yea r, simply regress 43:" on (it I'D, given that both sides of the equation are already expressed in annual rates. 0 For k equal to 3, 5 and 10 years, divide sh", by, respectively, 3, 5 and 10. Afterwards, regress this Mg" (or "5;" , or "1'3" , respectively, for the cases with 5- and 10-year maturities} on (it 1'E)