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to 39) According to the international Fisher Effect, if an investor purchases a five-year U.S. bond that has an annual intere
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Answer #1

International Fisher's Effect:

E = id E = 1 + if

E = change in exchange rate

id= Domestic country exchange rate

if= Foreign Currency exchange rate

05-06 14.06

E = -0.94%

So, the investor must be expecting the "US Dollar" to "appreciate" at the rate of at least 1 % per year over next year.

Hence, answer is Option - C

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