Estimate the exchange rate in the next two years, if US inflation rate is 5%, and...

Question

Question

Answer 1

Answer #1

А B E F H 1 2 3 4 Forward Exchange Rate = Spot Rate *(1+Inflation Rate in US)n / (1+Inflation Rate in Canada)n Spot Rate =

Answer 2

Similar Homework Help Questions

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 $10585 Tip Use the "Amoateng Gut Check' to forecast this exchange rate O...
7,8 If last year's Euro US$ rate was 0 6780 and the current rate is 07455,...

7,8 If last year's Euro US$ rate was 0 6780 and the current rate is 07455, what is the change in currency (appreciation or depreciation) OA-6.70% OB 6.70% OC-9.49% D 9.49% O E none QUESTION 8 ITUS T-bil rate is currently at 5% and that of Mexico is 8%, what will be the exchange rate five years from now if the spot exchange rate is 50 20 per peso? Tip Use the "Amoatong Gut-Check" to forecast O A $0 2303...
help with 3,9,10 please The market value of debt is $425 million and the total market...

help with 3,9,10 please The market value of debt is $425 million and the total market value of the firtn is $925 million. The cost of equity is 17%, the cost of debt is 10% and the corporate tax rate is 35%. What is the WACC? O A 11.01% OB 12.18% OC 13.78% OD 14.17% E none Suppose the nominal risk-free rate of interest in US is 3% and that of Canada is 2% The inflation rate in US is...

If US T-bill rate is currently at 5% and that of Mexico is 8% what will...

If US T-bill rate is currently at 5% and that of Mexico is 8% what will be the exchange rate five years from now if the spot exchange rate is $0.20 per peso? Tip Use the "Amoateng Gut-Check" to forecast A SO 2303 B. $0 2103 C. $0.1737 D. $0 1567 E none
If US T-bill rate is currently at 5% and that of Mexico is 8%, what will...

If US T-bill rate is currently at 5% and that of Mexico is 8%, what will be the exchange rate five years from now if the spot exchange rate is $0.20 per peso? Tip Use the "Amoateng Gut-Check" to forecast A. $0.2303 B. $0.2103 C. $0.1737 OD. SO 1567 E none
Next one-year period, forecasted inflation rate is 5% in China and 3% in US. Current spot...

Next one-year period, forecasted inflation rate is 5% in China and 3% in US. Current spot exchange rate is RMB4.00/USD (RMB is the name of Chinese currency). What is the forecasted spot exchange rate in one year according to relative PPP? A. RMB4.08/USD B. RMB4.12/USD C. RMB4.27/USD D. RMB4.40/USD

Problem 3 The following information is given: forecast annual rate of inflation for Canada: 0.30% p.a....

Problem 3 The following information is given: forecast annual rate of inflation for Canada: 0.30% p.a. forecast annual rate of inflation for the US: 0.50% p.a. two-year interest rate Canada: 1.10% p.a. two-year interest rate U.S.: 0.32 % p.a. spot rate: CAD/USD 1.040 forward rate 2 years: CAD/USD 1.050 a) Make a prediction on the spot exchange rate in two years based on PPP, IFE, and FEP. b) Do the parity conditions hold?
If the spot exchange rate for the US/Canadian dollar rate was 1.0150 in 2011 and risk-free...

If the spot exchange rate for the US/Canadian dollar rate was 1.0150 in 2011 and risk-free rate was 3.5% in Canada and 2.5% in US, what would be the expected exchange rate in 2013? A. -$0.9955 B. $0.9955 C. $1.0349 D. -$1.0349 E. none
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

assume the following: current exchange rate $1.40/pound inflation rate/year in the us 4% inflation rate/year in...

assume the following: current exchange rate $1.40/pound inflation rate/year in the us 4% inflation rate/year in england 7% if ppp holds what would you expect the exchange rate to be in 7 years?