Suppose S = $1.25 / ₤ and the 1-year forward rate is F = $1.20 / ₤ . The real interest rate on a riskless government security is 2 percent in both England and the United States. T he U.S. inflation rate is 5 percent. (5 credits) a. What is England ’ s nominal required rate of return on riskless government securities? b. What is England ’ s inflation rate if the equilibrium relationships hold?