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3. The figure below shows the FX market. Based on the figure answer questions below. E H.R.R. 30CH/CF F.R.R. R.R. RH 3.a. If the current

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3. The figure below shows the FX market. Based on the figure answer questions below. E H.R.R. 30CH/CF F.R.R. R.R. RH 3.a. If the current exchange rate is 45CH/cF, which would be greater: Home rate of return or Foreign rate of return, and how would the exchange rate change: Increase, Decrease or No change? Greater: Change in E: 3.b. If the current exchange rate is 25CH/cF, which would be greater: Home rate of return or Foreign rate of return, and how would the exchange rate change: Increase, Decrease or No change? Greater: Change in E:2. In cases below, answer the equilibrium exchange rate. 2.a. Foreign interest rate 5%, Home interest rate 7%, and the expected future exchange rate Ee = 153CH/CF. 2b. Foreign interest rate is 9%, Home interest rate 4%, and the expected exchange rate is 76 CHICF

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