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Due to the integrated nature of their capital markets, investors in both the U.S. and U.K. require the same real interest rate, 2.5%, on their

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Due to the integrated nature of their capital markets, investors in both the U.S. and U.K. require the same real interest rate, 2.5%, on their lending. There is a consensus in capital markets that the annual inflation rate is likely to be 3.5% in the U.S. and 1.5% in the U.K. for the next three years. The spot exchange rate is currently $1.50/. Using the International Fisher Effect, what is your expected future spot dollar-pound exchange rate in three years from now? $1.5597/ $1.5785/ $1.5904/5 $1.61546 Question 7 1 pts Due to the integrated nature of their capital markets, investors in both the U.S. and U.K. require the same real interest rate, 2.5%, on their lending.There is a consensus in capital markets that the annual inflation rate is likely to be 3.5% in the U.S. and 1.5% in the U.K. for the next three years. The spot exchange rate is currently $1.50/. Using the Purchasing Power Parity, what is your expected future spot dollar-pound exchange rate in three years from now? $1.5904/ $1.6154/6 $1.5597/6 $1.5785/

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