Question
Hi, Could you please help me answer the questions below? I need the correct answer, and if possible, a brief explanation. Thanks very much :)
Hi,
Could you please help me answer the questions below? I need the correct answer, and if possible, a brief explanation. Thanks very much :)
1.According to the international Fisher effect, if an investor purchases a five-year U.S. bond that has an annual interest rate of 3% rather than a comparable British government bond that has an annual interest rate of 2%, then the investor must be expecting the _______ to _______at a rate of at least 1% per year over the next 5 years.
a)British pound; depreciate
b)U.S. dollar; depreciate
c)British pound; appreciate
d)U.S. dollar; appreciate
2.What is the difference between Uncovered Interest Rate Parity (UIRP) and Covered Interest Rate Parity (CIRP)?
3.Is there a difference between The Fisher effect, and the (INTERNATIONAL) Fisher effect?
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