Question
All interest and inflation rates are stated as annual rates. Purchasing power parity 1. If the spot market exchange rate for the British pound is
All interest and inflation rates are stated as annual rates.
Purchasing power parity
1. If the spot market exchange rate for the British pound is 1.3158, the expected inflation rate for the UK is 2.10%, and the expected inflation rate for the US for the next year is 1.90%, what is the expected exchange rate for the British pound in one year?
2. If the spot market exchange rate for the Philippine peso is 52.55, the expected inflation rate for the Philippines is 5.1 %, and the expected inflation rate for the US is 1.90%, what is the expected exchange rate for the Philippine peso in six months?
3. If the spot market exchange rate for the Swiss franc is 0.9919, the expected inflation rate for Switzerland is 0.70%, and the expected inflation rates for the US is 1.90% what is the expected exchange rate for the Swiss franc in two years?
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