Which of the following statements are true? 1. If IRP holds then you can still make an arbitrage profit. II. In the PPP theory, the exchange rate between currencies of two countries should be equal to the ratio of the countries' price levels. III. Relative to Purchasing Power Parity (PPP), IRP are violated (evidence against it) more often. I only Il only III only I & Ill only None of the above choices Suppose that the year 1 and year 2 interest rates are 3% and 2% in US, the spot exchange rate is $1 = 0.6590 and the two-year forward exchange rate is 1=$1.5500. Using IRP, what must the two-year interest rate be in the UK - two-year interest rate is the annual rate investors earn each year in the next 2 years? Enter percent, round to 2 decimal places. Which of the following statement(s) is/are false? 1. The International Fisher Effect suggests that the nominal interest rate differential reflects the expected change in the exchange rate. II. Generally unfavorable evidence on IRP suggests that substantial barriers to arbitrage exist. III. The IRP holds all the time. O I only O Il only O III only I and II only None of the above choices Suppose, the one-year forward rate is $1.00 = Euro 0.75 and the rates of inflation expected to prevail for the next year in the U.S. is 2% and 3% in the Euro zone. Under PPP, what is the spot rate, $1 = that should prevail, round to 4 decimal places