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Formulas: S1=S0PS1/PS0PUS1/PUS0 - Real interest rate = Nominal interest rate Inflation rate ExtraRetum=ExtraRetum=(U.K.InterestRateU.S.InterestRate)PercentDepreciationofthePound(U.K.InterestRateU.S.InterestRate)+PercentAppreciationofthePound A firm that moves funds into foreign currencies to take advantage of

Formulas: S1=S0PS1/PS0PUS1/PUS0 - Real interest rate = Nominal interest rate Inflation rate ExtraRetum=ExtraRetum=(U.K.InterestRateU.S.InterestRate)PercentDepreciationofthePound(U.K.InterestRateU.S.InterestRate)+PercentAppreciationofthePound A firm that moves funds into foreign currencies to take advantage of higher investment yields abroad is a) demonstrating purchasing power parity. b) engaging in futures markets. c) engaging in interest arbitrage. d) speculating

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