Anyone do Schweser Volume 1 Mock 3 (Econ Relative PPP?)

CFA Level II Economics
#1

I’m curious if anyone did this mock and has any response to schweser’s explanation of the answer to 13 from the morning session of mock 3. I’ve been finding a handfull of errors in schweser, but this isn’t in the errata. I’m not saying the answer is wrong, but I’m trying to brush up on Econ and explanation for the answer just makes no sense to me. We are looking for the spot rate two years from today and the formula says E(S_1) and uses the uncovered interest rate parity formula. I’m just confused with the explanation from "Next, we estimate the JPY/EUR spot rate … " and on.

Any insights into this?

#2

Or can anyone just explain to me why the following equation is used for relative purchasing power parity while I don’t see it any of the books:

Assuming the rates E(S_1) and S_0 are in the form foreign/domestic (f/d)

E(S_1)=S_0*[(1+inflation_f)/(1+inflation_d)]

Schweser repeatedly uses this equation for relative purchasing power parity, but I just don’t understand.

#3

I’m hoping it is right because I changed my flash card on it