Question
Assume that the following information is available as of today. U.S. Mexico Real interest rate 2% 2% Nominal interest rate - 12% Spot rate -
Assume that the following information is available as of today.
| U.S. | Mexico | |
| Real interest rate | 2% | 2% |
| Nominal interest rate | - | 12% |
| Spot rate | - | $0.09 |
| One year forward rate | - | $0.12 |
1. Using the relative form of PPP, compute the difference between the expected rate of inflation of U.S. and that of Mexico.
2. Using IFE, compute the nominal interest rate of U.S.
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Marketing For Financial Advisors
Authors: Eric Bradlow, Keith Niedermeier, Patti Williams
1st Edition
0071605142, 978-0071605144
