Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

How to find the spot rate of MYR in one year with respect to Australian dollar (A$/MYR) . What should i use for IFE to

image text in transcribed

How to find the spot rate of MYR in one year with respect to Australian dollar (A$/MYR) . What should i use for IFE to get 0.4728 ?

image text in transcribed
.4595 Ad 0. 4703 / MYR ( 1 - 0 .623 ) Expected to Change in MER in 1 year = (1:0219) ( 1 . 046 ) 6 . 45 95 1 = - 1 2 - 30 % - Assume that locational arbitrage ensures that spot exchange rates are properly aligned. Also, assume that you believe in the International Fisher Effect (IFE). The spot rate of the Singapore dollar(S$) against the Australian dollar(A$) is 0.9486 (A$/S$). The spot rate of the Malaysian ringgit(MYR) against the Singapore dollar is 0.5080 (S$/MYR). You expect that the one-year inflation rate is 6.75% in Singapore, 4.46% in Malaysia and 2.08% in Australia. The one-year interest rate is 9.48% in Singapore, 7.71% in Malaysia and 5.67% in Australia. What is your expected the spot rate of the Malaysian ringgit in one year with respect to the Australian dollar (A$/MYR)? (enter 4 decimal MYR places number with no sign or symbol) - 4.46% 2 2.08 % 6.0446 MYR Spot rook Ad = ( A$ 0. 9486 / s( ) X Answers X ( 530. 5080 / MY12 ) = A$ 0. 4819 1 MYR The correct answer is: 0.4728 Expected to Change in MyR in lyeer 819 /MYR ( 1- 0.0227) (1, 020% 10.4710 ( 1. 04 46 ) = - 2. 28/0

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Financial Planning

Authors: Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk

14th edition

978-1305887725, 1305887727, 1305636619, 978-1305636613

More Books

Students also viewed these Finance questions

Question

Why do you want to be a clinical psychologist?

Answered: 1 week ago

Question

what is the E&M code

Answered: 1 week ago