What value does E b/e take?What is Balamb's effective exchange rate?

III. Consider three countries, Balamb, Dollet, and Esthar, with currencies B$, D$, and E$, respectively. All three countries trade with one another. You live in Balamb and currently have B$500. The nominal interest rate in Balamb is is = 0.011, the nominal interest rate in Dollet is ip = 0.060, and the nominal interest rate in Esthar is is = 0.012. The spot rates are EBD = 0.70 and EBE = 1.19. The forward rates are FB/D = 0.68 and FB/B = 1.25. a) Which of the following scenarios provides the highest payoff? a. Buying bonds in Balamb b. Converting B$ to D$ and buying bonds in Dollet with a forward contract c. Converting B$ to E$ and buying bonds in Esthar with a forward contract d. Indifferent between A and B e. Indifferent between A and C f. Indifferent between B and C g. Indifferent between A, B, and C