1. If inflation is anticipated to be 6 percent during the next year, while the real rate of interest for a one-year loan is 4 percent, then what should the nominal rate of interest be for a risk-free one-year loan?
2. Given these two exchange rates, $1 = 12.350 Mexican pesos and $1 = €0.7699, compute the cross-rate between the Mexican peso and the euro. State this exchange rate in pesos and in euros. (Do not round intermediate calculations. Round your answers to 4 decimal places.)
cross rate of 1 peso
cross rate of 1 euro