Question
Assume the current spot rate between the UK and the U.S. is 0.786 per $1, the expected inflation rate in the U.S. is 2.87 percent,
Assume the current spot rate between the UK and the U.S. is 0.786 per $1, the expected inflation rate in the U.S. is 2.87 percent, and the expected inflation rate in the UK is 3.8 percent. If relative purchasing power parity exists, what will the exchange rate be 2 years from now? Show work please.
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Investment Science
Authors: David G. Luenberger
2nd Edition
0199740089, 978-0199740086
