Question

please provide helpful answers for both questions posted.

Thank you

absolute purchasing power parity, what should an identical A. $374.24 B. $387.05 C. $361.95 D. $388.52 E. $339.90 18. Assume you can currently exchange $100 for 780.25. The inflation rate in Europe is expected to be 1.8 percent as compared to 2.4 percent in the U.S. Based on relative purchasing power parity, what should the exchange rate be four years from now? A. €.8219/$1 B. €.8014/$1 C. €.7970/$1 D. €.8073/$1 E. €.7834/$1 19. Riverside stock should return 14 percent in a boom, 11 percent in a normal economy, and 4 percent in a recession. The probabilities of a boom, normal economy, and recession are 8 percent, 90 percent, and 2 percent, respectively. What is the variance of the returns on this stock? A. 001506 B. 011387 C. .000169 D. 001538 E. 011561 End of test!

Answer 1

Giuen too $= 80 25 0.8029 1$ 1+ mflation ak Spot rae x FOYLand aale 4mflaion ae m foreiyncway mpation ale m home Curveniy 'voflahon Tale m foeimcunay 1 +0.024 FR : 8025 x o.018 FRE 0.8042a9 e / Answer D

stoer Relaun 4- RR d2 prob Boom 14-11.10 +99 a.0x2-90 8.9) 14 NOmal -0-10X010 = 00 1-11-t0 =0 10 1¥ O.90 economy -7.1x-7.1 = Reeicsion 4-11.102-7-1 4 O.02 expected otun Re poxRleun 14xe 08tt XO 0+ 4x002 Rs 11.10 Vasrianu 2 prob de =0.08 x.41 0.90 x0 0l +s04x002 Varian= 1.6898 % 1.6898 x Antsse .000 169 Nariane