Question
Assume the 3month interest differential for the British pound minus the euro is equal to 0.02. The 6month interest differential is equal to 0.05. Which
Assume the 3month interest differential for the British pound minus the euro is equal to 0.02. The 6month interest differential is equal to 0.05. Which is the following is correct?
a.The pound is expected to appreciate against the euro by 2% in 3 months.
b. The pound is expected to appreciate against the euro by 5% in 6 months
c.The euro is expected to appreciate against the pound by 2% in 3 months.
d.The euro is expected to depreciate against the euro by 5% in 6 months.
please explain why.
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Principles of Economics
Authors: N. Gregory Mankiw
8th edition
1305585127, 978-1305971493, 978-1337516860, 1337516864, 978-0357539200, 978-1305585126
