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Honeybadgeria (HON) and Capuchin (CAP) have efficient money markets. Honeybadgeria (HON) and Capuchin (CAP) have efficient money markets. HONEYBADGERIA CAPUCHIN 2.25 2.25 Spot exchange rate

image text in transcribedHoneybadgeria (HON) and Capuchin (CAP) have efficient money markets.

Honeybadgeria (HON) and Capuchin (CAP) have efficient money markets. HONEYBADGERIA CAPUCHIN 2.25 2.25 Spot exchange rate (HON/CAP) One-year posted lending rate One-year expected inflation rate 3.40% ? 1.25% 2.70% Based on the information provided, answer: a. Under parity conditions, would be CAPUCHIN's one-year posted lending rate? (3 POINTS) b. What is the expected spot rate one year from now? (3 POINTS) c. Name which three theories permit these parity conditions to hold and explain the two key assumptions behind them. (3 POINTS)

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