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ebook Assume that the following regression model was applied to historical quarterly data: do +INT, + INF+ we where e percentage change in the exchange

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ebook Assume that the following regression model was applied to historical quarterly data: do +INT, + INF+ we where e percentage change in the exchange rate of the Japanese yen in period INT, average real interest rate differential (U.S. Interest rate minus Japanese interest rate) over period INF-inflation differential (U.S. Inflation rate minus Japanese inflation rate) in the previous period as a regression coefficients We error term Assume that the regression coefficients were estimated a follows: 0.0 0.7 a> 0.6 Also assume that the inflation differential in the most recent period was 2 percent. The real interest rate differential in the upcoming periods forecasted as follows: Interest Rate Differential Probability 0% 30% 60 10 Ir Stillwater, Inc., uses this information to forecast the Japanese yen's exchange rate, what will be the probability distribution of the yen's percentage change over the upcoming period? Round your answers to one decimal place. Forecast of Interest Rate Forecast of the Percentage Change in Differential the Japanese Yen Probability 09 30% 1% % 509 2% 10%

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