Homework Answers
answer is B
since the interest rate in canada will remain same and interest rate in US will increase by 2% next year this will depreciate cannada currency and will create demand for US currency in cannada which will appreciate US currency
a is incorrect on same interest rate currency dont appreciate
c is incorrect currency of cannada will depreciate since an increase in demand of US currency due to increased interest will create demand for US currency which will influence people sell canada curency because of liquidity requirements and in turn buy US currency in anticipation of appreciation of currency
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The expected interest rate in the USA is 10% and the expected interest in the Canada...
13) Suppose the interest rate in Canada falls and the interest rate in Japan remains the...
13) Suppose the interest rate in Canada falls and the interest rate in Japan remains the same. Interest rate parity implies that given equal risk A) the inflation rate is higher in Japan. B) Japanese financial investments are more profitable. C) the yen is expected to depreciate against the dollar. D) the yen is expected to appreciate against the dollar E) Canadian financial investments are less profitable. Answer: 0
Suppose the inflation rate in Canada is 2% and is expected to remain 2% for the...
Suppose the inflation rate in Canada is 2% and is expected to remain 2% for the upcoming year. Bank deposits pay 3% annual interest rate in Canada. Suppose you deposit $100 at a bank. a. In nominal terms, your savings will grow to _$ next year. b. Due to inflation, the real value of your savings account next year is c. What is the real rate of return on your savings? A firm is considering buying a machine that will...
U.S. (Nominal Interest Rate) = 4% Canada (Nominal Interest Rate) = 5% According to economic theor...
U.S. (Nominal Interest Rate) = 4% Canada (Nominal Interest Rate) = 5% According to economic theory, investors will move their funds from U.S. to Canada because they earn a better interest rate, therefore, demand for Canadian $ will increase, so Canadian $ will appreciate, and $ will depreciate. According to the fishier effect, real interest rate is assumed to usually be in equilibrium. So, Nominal Interest Rate = Real Interest Rate + Expected Inflation U.S. 4% = 3% + 1%...
Suppose the nominal risk-free rate of interest in US is 3%, and that of Canada is...
Suppose the nominal risk-free rate of interest in US is 3%, and that of Canada is 2%. The inflation rate in US is 5%, what is the inflation rate in Canada? A. 1% OB.-1% C.2% D.4% - E none QUESTION 10 Estimate the exchange rate in the next two years, if US inflation rate is 5%, and that of Canada is 4%. The current spot rate is $10585 Tip Use the "Amoateng Gut Check' to forecast this exchange rate O...
hi why the answer is c? cn you show me how its calculated?\ Suppose the domestic interest rate is 3% and the foreign in...
hi why the answer is c? cn you show me how its calculated?\
Suppose the domestic interest rate is 3% and the foreign interest rate is 2%. If uncovered interest parity holds, by how much is the domestic currency expected to appreciate or depreciate against the foreign currency? a) The domestic currency is expected to appreciate by 1% b) The domestic currency is expected to appreciate by 2%. c) The domestic currency is expected to depreciate by 1% d) The...
If the interest rate in the U.S. is expected to be 5 percent for the next...
If the interest rate in the U.S. is expected to be 5 percent for the next year. The interest rate in the U.K. is expected to be 8 percent for the next year. Uncovered IRP suggests that the: Multiple Choice O U.S. dollar should depreciate against the pound by about 3 percent. O British pound should depreciate against the dollar and the dollar should appreciate against the pound, both by about 3 percent O British pound is should appreciate against...
Andi is considering investing $1000 in Canada, where she expects an interest rate of 3 percent,...
Andi is considering investing $1000 in Canada, where she expects an interest rate of 3 percent, or in the U.K., where the expected interest rate would be 5 percent. The current exchange rate is 0.6 £/$, which could take by the end of the year any value between 0.4 and 0.7£/$ with equal probability. Daisy Cortez a) What should Andi do? b) How does your answer change if there is a currency conversion fee of 3 percent?
5. Suppose the current spot exchange rate is $1.17 to €1. The dollar is expected to...
5. Suppose the current spot exchange rate is $1.17 to €1. The dollar is expected to appreciate to $1.11 to €1 during the next year. (Assume inflation and risk etc. are the same between the Eurozone and the U.S.) (a) What is the expected currency appreciation gain for the dollar? (Give this as a percentage and round to the nearest 0.1%.) (b) Suppose the interest rate on 1-year corporate bonds in the U.S. is 4%. What is the expected total...
Map Analysis 4 The USA and Canada Using the maps of Canada and the United States,...
Map Analysis 4 The USA and Canada Using the maps of Canada and the United States, answer the following questions: A. Which 2 states have borders on the most other states? Name the state, and the states that border on them B. Name all the provinces and territories of Canada C. What states of the USA and provinces of Canada have a border on the Great Lakes? Also, name the 5 Great Lakes. D. Write a short essay on one...
if the interest rate in Brazil is 10 percent and interest rate in USA is 2%,...
if the interest rate in Brazil is 10 percent and interest rate in USA is 2%, the Spot exchange rate is $1 = 5.16 Brazilian Real. Assume that the interest rate parity holds, what must be the one year forward exchange rate between Brazil and the United States.? Explain. Show all your calculations if you want partial credit.
13) Suppose the interest rate in Canada falls and the interest rate in Japan remains the same. Interest rate parity implies that given equal risk A) the inflation rate is higher in Japan. B) Japanese financial investments are more profitable. C) the yen is expected to depreciate against the dollar. D) the yen is expected to appreciate against the dollar E) Canadian financial investments are less profitable. Answer: 0
Suppose the inflation rate in Canada is 2% and is expected to remain 2% for the upcoming year. Bank deposits pay 3% annual interest rate in Canada. Suppose you deposit $100 at a bank. a. In nominal terms, your savings will grow to _$ next year. b. Due to inflation, the real value of your savings account next year is c. What is the real rate of return on your savings? A firm is considering buying a machine that will...
Suppose the nominal risk-free rate of interest in US is 3%, and that of Canada is 2%. The inflation rate in US is 5%, what is the inflation rate in Canada? A. 1% OB.-1% C.2% D.4% - E none QUESTION 10 Estimate the exchange rate in the next two years, if US inflation rate is 5%, and that of Canada is 4%. The current spot rate is $10585 Tip Use the "Amoateng Gut Check' to forecast this exchange rate O...
hi why the answer is c? cn you show me how its calculated?\
Suppose the domestic interest rate is 3% and the foreign interest rate is 2%. If uncovered interest parity holds, by how much is the domestic currency expected to appreciate or depreciate against the foreign currency? a) The domestic currency is expected to appreciate by 1% b) The domestic currency is expected to appreciate by 2%. c) The domestic currency is expected to depreciate by 1% d) The...
If the interest rate in the U.S. is expected to be 5 percent for the next year. The interest rate in the U.K. is expected to be 8 percent for the next year. Uncovered IRP suggests that the: Multiple Choice O U.S. dollar should depreciate against the pound by about 3 percent. O British pound should depreciate against the dollar and the dollar should appreciate against the pound, both by about 3 percent O British pound is should appreciate against...
Map Analysis 4 The USA and Canada Using the maps of Canada and the United States, answer the following questions: A. Which 2 states have borders on the most other states? Name the state, and the states that border on them B. Name all the provinces and territories of Canada C. What states of the USA and provinces of Canada have a border on the Great Lakes? Also, name the 5 Great Lakes. D. Write a short essay on one...
if the interest rate in Brazil is 10 percent and interest rate in USA is 2%, the Spot exchange rate is $1 = 5.16 Brazilian Real. Assume that the interest rate parity holds, what must be the one year forward exchange rate between Brazil and the United States.? Explain. Show all your calculations if you want partial credit.
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