Question 7 The U.S. inflation rate is expected to be 5% over the next year, while...
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 |
Homework Answers
the expected spot rate at the end of one year is
=1.03*((1+5%)/(1+5%))
=1.03
the above is answer..
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Question 7
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