You can purchase $5 million of 1-year Nigerian sovereign hard currency bonds to yield 7%, or 3% more than 1-year US Treasury bonds. Nigerias 1-year local currency government bonds yield 9%. Current FX rate is 150 Nigerian Naira per 1 US Dollar.

a) What is the future FX rate of Nigerian Naira to US Dollars Exchange Rate for 1-year that generates the same rate of return for

the 1-year Nigeria hard currency bonds and

the 1-year local currency government bonds?

b) Which exchange rate would better correspond to the Interest Rate Parity (IRP) future FX rate of the Nigerian Naira to the US Dollar for 1-year. Justify your answer.