1. Explain the difference between covered and uncovered interest rate parity.
2. In 2007, according to the CIA World Factbook, Zimbabwe had an inflation rate of 976% per annum-the world's undisputed inflation leader. Botswana, its neighbor to the east, had an inflation rate of 11.4%. If PPP holds, how would you expect their currency exchange rates to move over the next 12 months?