Homework Answers
A and B are both correct
As US rates is less than British rates, appreciation of US dollar value over the next year and depreciation of pound's value over the next year
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Assume that U.S. interest rates are 6%, while British interest rates are 79. If the international...
US interest rates are 3 percent, while Canadian interest rates are 4 percent. If the international...
US interest rates are 3 percent, while Canadian interest rates are 4 percent. If the international Fisher effect holds and is used to determine the future spot rate, the forecast would reflect an expectation of: a. appreciation of the Canadian dollar's value over the next year b. depreciation of the Canadian dollar's value over the next year c. no change in the Canadian dollar's value over the next year d. none of the options listed e. not enough information to...
27. The interest rate in the U.K. is 7%, while the interest rate in the U.S....
27. The interest rate in the U.K. is 7%, while the interest rate in the U.S. is 5%. The spot rate for the British pound is $1.50. According to the international Fisher effect (IFE), the British pound should adjust to a new level of:
According to the IFE, if British interest rates are lower than U.S. interest rates a. the...
According to the IFE, if British interest rates are lower than U.S. interest rates a. the British inflation rate will decrease. b. the British pound will appreciate against the dollar. c. today's forward rate of the British pound will equal today's spot rate. d. the British pound will depreciate against the dollar. e. the British pound's value will remain constant.
to 39) According to the international Fisher Effect, if an investor purchases a five-year U.S. bond...
to 39) According to the international Fisher Effect, if an investor purchases a five-year U.S. bond that has an annual interest rate of 5% rather than a comparable British bond that has an annual interest rate of 6%, then the investor must be expecting the at a rate of at least 1% per year over the next 5 years. A) British pound; appreciate B) British pound; revalue C) U.S. dollar; appreciate D) U.S. dollar, depreciate
Note: Use of approximation for interest rate parity is OK. Assume the four-year annualized interest rate...
Note: Use of approximation for interest rate parity is OK. Assume the four-year annualized interest rate in the US is 9 percent and the four-year annualized interest rate in Singapore is 6 percent. Assume interest rate parity holds for a four-year horizon. Assume the spot rate of the Singapore dollar is $.60. If the forward rate is used to forecast exchange rates, What will be the forecast for the Singapore dollar’s spot rate in four years? Does this forecast imply...
2. Interest rates are currently 2% in the US and 3% in Germany. The current spot...
2. Interest rates are currently 2% in the US and 3% in Germany. The current spot rate between the € and $ is $1.5/€. What is the expected spot rate in one year if the international Fisher effect holds? (Answer:1.4854$/€)
All interest and inflation rates are stated as annual rates. International Fisher effect 4. If the...
All interest and inflation rates are stated as annual rates. International Fisher effect 4. If the spot market exchange rate for the Haitian gourde is 783.961, the 1-year interest rate paid on Haitian government debt is 20.0%, and the 1-year interest rate on US government debt is 2.60%, what is the expected exchange rate for the gourde in one year? 5. If the spot market exchange rate for the Australian dollar is 0.7166, the 3-month interest rate on Australian government...
answer these 4 . will rate after A reduction in the British interest rate relative to...
answer these 4 . will rate after
A reduction in the British interest rate relative to the U.S. interest rate will cause a(n): appreciation of the dollar and an appreciation of the British pound. O appreciation of the dollar and a depreciation of the British pound. depreciation of the dollar and an appreciation of the British pound. O depreciation of the dollar and a depreciation of the British pound. A decrease in preference for Japanese automobiles, all else the same,...
In July, the one year interest rate is 12.63% on British pounds and 9.13% on U.S....
In July, the one year interest rate is 12.63% on British pounds and 9.13% on U.S. dollars. The current exchange rate is USD1.63/GBP. Suppose a change in expectations regarding future U.S. inflation causes the expected future spot rate to decline to $1.49/GBP. Let's assume that the British interest rate stayed at 12.63% because there has been no change in expectations of British inflation. What would the U.S. interest rate expected to be?
Hello, Please provide details for the answers. Thank you! A put option on British pounds has...
Hello,
Please provide details for the answers.
Thank you!
A put option on British pounds has a strike (or exercise) price of $1.60/BP and the put premium per British pound is $0.03. If he spot FX rate at the expiration date is $1.55/BP, what would be the net profit of this put option holder. (calculate the net profit calculation & draw a net profit graph precisely) 3. 0.02 US one year interest rate is 6% annual and EU one year...
27. The interest rate in the U.K. is 7%, while the interest rate in the U.S. is 5%. The spot rate for the British pound is $1.50. According to the international Fisher effect (IFE), the British pound should adjust to a new level of:
to 39) According to the international Fisher Effect, if an investor purchases a five-year U.S. bond that has an annual interest rate of 5% rather than a comparable British bond that has an annual interest rate of 6%, then the investor must be expecting the at a rate of at least 1% per year over the next 5 years. A) British pound; appreciate B) British pound; revalue C) U.S. dollar; appreciate D) U.S. dollar, depreciate
answer these 4 . will rate after
A reduction in the British interest rate relative to the U.S. interest rate will cause a(n): appreciation of the dollar and an appreciation of the British pound. O appreciation of the dollar and a depreciation of the British pound. depreciation of the dollar and an appreciation of the British pound. O depreciation of the dollar and a depreciation of the British pound. A decrease in preference for Japanese automobiles, all else the same,...
Hello,
Please provide details for the answers.
Thank you!
A put option on British pounds has a strike (or exercise) price of $1.60/BP and the put premium per British pound is $0.03. If he spot FX rate at the expiration date is $1.55/BP, what would be the net profit of this put option holder. (calculate the net profit calculation & draw a net profit graph precisely) 3. 0.02 US one year interest rate is 6% annual and EU one year...
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