Question
Following information is available U.S.A Europe One-year nominal rate of interest 4% 6% One-year 2% 5% Spot rate USD 1.14/EUR One-year Forward rate USD 1.10/EUR
Following information is available
|
| U.S.A | Europe |
| One-year nominal rate of interest | 4% | 6% |
| One-year | 2% | 5% |
| Spot rate | USD 1.14/EUR | |
| One-year Forward rate | USD 1.10/EUR | |
1)Using the Relative Purchasing Power Parity, forecast the future spot rate one year from now.
2) Using the International Fisher Effect, Forecast the future spot rate one year from now.
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Investment Management
Authors: Stephen Lofthouse
2nd Edition
047149237X, 9780471492375
