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In July, the one-year interest is 12% on British pounds and 9% on US dollars. If the current exchange rate is $1.63/BP, what is the
In July, the one-year interest is 12% on British pounds and 9% on US dollars.
- If the current exchange rate is $1.63/BP, what is the expected future exchange rate in one year? (Work done by myself)
- Suppose a change in expectations regarding future US inflation causes the expected future spot rate to decline to $1.52/BP. What should happen to US interest rates? (Please provide explanation)
a) 1.63 * [(1.09)/(1.12)]^1 = 1.5863
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Faith Family And Finances Strong Foundations For A Better Life
Authors: Henry Fernandez, Kenneth Copeland
1st Edition
1603742808, 978-1603742801
