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42. SHORT RUN EXCHANGE FACTORS (asset market approach) E. = Eft1 (is-i+1) Where E, is the spot exchange rate, E* +1 is the expected spot

42. SHORT RUN EXCHANGE FACTORS (asset market approach) E. = Eft1 (is-i+1) Where E, is the spot exchange rate, E* +1 is the expected spot in the future, is and i are the returns on the US and UK short term assets. Let E$+1 = $2:30, is = .04 and i = .09. 1 Use the equation above to compute E

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