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5) Money and foreign exchange markets in Sydney and New York are very efficient. The following information is available: Sydney Spot Exchange Rate 0.99
5) Money and foreign exchange markets in Sydney and New York are very efficient. The following information is available: Sydney Spot Exchange Rate 0.99 $/A$ One year interest Rate 5.0% Expected inflation unknown New York 0.99 $/A$ 1.0% 0% a. What do financial markets suggest for inflation in Australia next year? b. Estimate today's one-year forward exchange rate between the dollar and the Australian $.
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a To estimate the expected inflation in Australia next year we can use the Fisher Effect formula 1 i...
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Contemporary Financial Management
Authors: James R Mcguigan, R Charles Moyer, William J Kretlow
10th Edition
978-0324289114, 0324289111
