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4. Money and foreign exchange markets in London and New York are very efficient. The following information is available: a. What do the financial markets

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4. Money and foreign exchange markets in London and New York are very efficient. The following information is available: a. What do the financial markets suggest for inflation in Europe next year? b. Estimate today's one-year forward exchange rate between the dollar and the euro? c. Estimate the expected future spot exchange rate one year from now given the above information. a. Use Generalized Fisher Effect b. Use Interest Rate Parity c. Use International Fisher Effect

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