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Assume these simple exchange rate relationships to answer the questions below: Forward rate equals the expected spot rate. The interest differential between two countries must be equal to the difference between the forward and spot exchange rates. Changes in exchange rates tend to match differences in inflation rates. a. Dollar interest rate = 4.1%; Laputian interest rate = 8.2%; 1-year forward exchange rate = LAP100 = USD1. What is the current spot exchange rate? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Current spot exchange rate LAP per dollar b. Current Lilliputian exchange rate = LIL40 = USD1; expected exchange rate at end of year = LIL45 = USD1; Lilliputian 1-year interest rate = 14.1%. What is the U.S. dollar interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Interest rate % c. The U.S. inflation rate is 5.1%; the inflation rate in Blefuscu is twice that of the United States; the 1-year forward exchange rate = BLE24.1 = USD1. What is the current exchange rate between Blefuscu and the United States? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Current exchange rate BLE per dollar Assume these simple exchange rate relationships to answer the questions below: Forward rate equals the expected spot rate. The interest differential between two countries must be equal to the difference between the forward and spot exchange rates. Changes in exchange rates tend to match differences in inflation rates. a. Dollar interest rate = 4.1%; Laputian interest rate = 8.2%; 1-year forward exchange rate = LAP100 = USD1. What is the current spot exchange rate? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Current spot exchange rate LAP per dollar b. Current Lilliputian exchange rate = LIL40 = USD1; expected exchange rate at end of year = LIL45 = USD1; Lilliputian 1-year interest rate = 14.1%. What is the U.S. dollar interest rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Interest rate % c. The U.S. inflation rate is 5.1%; the inflation rate in Blefuscu is twice that of the United States; the 1-year forward exchange rate = BLE24.1 = USD1. What is the current exchange rate between Blefuscu and the United States? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Current exchange rate BLE per dollar

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