assume that today is January1 U.S. $1.00 = .90 euros and the interest rate on

assume that today is January1 U.S. $1.00 = .90 euros and the interest rate on dollar deposits is 3%. If in one year:

a. the dollar appreciates relative to the euro by 10% what will be the return on dollar deposits in terms of euros?

b. the dollar depreciates relative to the euro by 20% what will be the return on dollar deposits in terms of euros?

c. the expected exchange rate is U.S. $1.00 = .95 euros what is the expected rate of depreciation for the dollar?

d. the dollar is expected to appreciate 5% what interest rate on euro deposits is required if the concepts of interests rate parity and capital mobility are to
hold