Your firm is a U.K.-based importer of bicycles. You have placed an order with an Italian for euro1,000,000 worth of bicycles. payment (in euro) is due in 12 months. Use a money market hedge to redenominate this one-year payable into a pound-denominated payable with a one-year maturity. Show your steps while including the numbers. If the nine-month forward rate F_o(Y/S) = 90. and. he inflation rate in the U.S. and Japan are 1.6% and -1.2% respectively, what should be S(Y/S)? If the 3-month CD rate is 2% (annual) in Russia and if the expected annual inflation is 5.7%. what is the real annual interest rate? If the International Fisher Effect holds, and if the following information is given, what should be S(MYD/SGD)? The expected inflation in Malaysia is 4% The expected inflation in Singapore is 3% F(SGD/MYD) is 0.3 SGD is Singapore dollar and MYD is Malaysian Ringgit Suppose that the annual interest rate is 2.5 percent in Korea and 2.3 percent in Germany and that the spot exchange rate is Won 1933.2/euro and the forward exchange rate, with one-year maturity, is W1915.5/euro. Assume that a trader can borrow up to euro2,000,000 or Won3.866.400.000. Does the interest rate parity hold? Show your work. Is there an arbitrage opportunity? (covered interest arbitrage) If there is an arbitrage opportunity, what steps should we take in order to make an arbitrage profit? What will be our maximum profit