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6% 4% 2.5% 2% 1.5% 3 6 months months months Suppose that E, the cost of foreign currency expressed in units of local currency, is

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6% 4% 2.5% 2% 1.5% 3 6 months months months Suppose that E, the cost of foreign currency expressed in units of local currency, is equal to 1. What is Fon that is the cost of foreign currency for delivery in 3 months? QUESTION 13 Term Structure of Interest Rates 6% 4% 2.5% 2% 1.5% 3 4 months months months Suppose that E, the cost of foreign currency expressed in units of local currency, is equal to 1. What is Exp{Ente)that is the Expected cost of foreign currency for immediate delivery that will emerge in 4 months? . QUESTION 14 Term Structure of Interest Rates 6% 4% 2.5% 2% 1.5% 4 6 months months months Suppose that E, the cost of foreign money expressed in units of local currency, Is now equal to 2. Suppose also that traders in the market have uniform expectations and the uncovered interest rate party holds. What is the expected change in the spot rate at 6 months, that is (exp(E)- EME? 6% 4% 2.5% 2% 1.5% 3 6 months months months Suppose that E, the cost of foreign currency expressed in units of local currency, is equal to 1. What is Fon that is the cost of foreign currency for delivery in 3 months? QUESTION 13 Term Structure of Interest Rates 6% 4% 2.5% 2% 1.5% 3 4 months months months Suppose that E, the cost of foreign currency expressed in units of local currency, is equal to 1. What is Exp{Ente)that is the Expected cost of foreign currency for immediate delivery that will emerge in 4 months? . QUESTION 14 Term Structure of Interest Rates 6% 4% 2.5% 2% 1.5% 4 6 months months months Suppose that E, the cost of foreign money expressed in units of local currency, Is now equal to 2. Suppose also that traders in the market have uniform expectations and the uncovered interest rate party holds. What is the expected change in the spot rate at 6 months, that is (exp(E)- EME

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