*Please rate thumbs up
D Question 39 1 pts Given the information Inflation rate in US th); 3.0% Inflation rate...
Use the folloning information to answer qustians 13-15 Suppose the annual inflation rate in the US is expected to be 3.5 %, while it is expected to b 6.00 % in Australia. The current spot rate for the Australian Dollar AD) is S07552 13. According to Purchasing Power Parity, estimate the expected percentage change in the of the AD during a one-year period b. c. d. 4.167% appreciation 2.358% appreciation 4.167% depreciation 2.358% depreciation
The annual inflation rate in the US is expected to be 2.93 percent and the annual inflation rate in Poland is expected to be 4.31 percent. The current spot rate between the zloty and dollar is 24.1052/$. Assuming relative purchasing power parity holds, what will the exchange rate be in four years? Multiple Choice 24.2775/$ 24.21931$ 24.3365/$ Z3 883215 23.9376/5
Question 7 The U.S. inflation rate is expected to be 5% over the next year, while the European inflation rate is expected to be 5%. The current spot rate of the euro is $1.03. Using purchasing power parity, the expected spot rate at the end of one year is $____. 1.02 1.03 1.04 1.05
According to the Purchasing Power Parity, if a Big Mac was representative of a basket of goods in the US and the UK, and a Big Mac cost $5 and £4, then what should the spot rate be in terms of US dollars (i.e. $/£) Multiple Choice $1/£ $1.20/£ $1.30/£ $1.35/£ $1.25/£
Given the information: Interest rate in US (Rh): Interest rate in UK (Rf): The current spot rate for GBP (SR): 6% 4% $1.50 Suppose your lines of credit are USD 15,000,000 in the US and GBP 10,000,000 in UK. If your forecast tells you that the spot rate of GBP one year later (SR1) will be $1.535, then your preferred investment strategy should earn a net profit of: GBP 41,694 GBP 200.000 USD 64.000 USD 300,000
5 pts Question 20 Due to the integrated nature of their capital markets, investors in both the U.S. and UK, require the same real interest rate, 2.5%, on their lending. There is a consensus in capital markets that the annual inflation rate is likely to be 3.5% in the US. and 1.5% in the U.K. for the next three years. The spot exchange rate is currently $1.50/E. Using the Purchasing Power Parity, what is your expected future spot dollar-pound exchange...
Assume the following information about the U.S. and New Zealand: U.S. N.Z. Inflation Rate 1.0% 3.0% Interest Rate 5.0% 8.0% NZ Spot NZ1 = $0.6204 According to the International Fisher Effect, what is the expected spot rate of the New Zealand dollar in one year? Round your answer to four decimals and no currency signs. Answer:
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?
38) The current spot rate between the pound and dollar is £.7592/S. The expected in the U-S is 2.87 percent and the expected inflation rate in the U.K. is 1.94 percent. As power parity holds, what will the exchange rate be next year? relative purchasing A) £.7957/S B) £.7663 /S C £.7521 /S D) £.7822 /S E) £.7822 /S 39) Absolute purchasing power parity is most likely to exist for which one of the t A) B) C) D) E)...
Given the information: Interest rate in US (Rh): 4% Interest rate in UK (RF): 2% Line of credit in US USD 15,000,000 Line of credit in UK GBP 10,000,000 The current spot rate for GBP (SRo: $1.50 Suppose your forecast tells you that the spot rate of GBP one year later (SR2) will be $1.52. Then, based on your estimated uncovered rates (Ruh & Ruf), you should borrow in and invest in GBP: USD USD: GBP