Please answer each question in full with explanations for me to accept the answer 1 FX forecasting using Purchasing Power Parity The expected inflation rate until the end of next year, 2017, is 2 in the US, and 12 in Argentina, respectively The current spot exchange rate between Argentina peso (AP) and the US dollar is AP15 0 $ What will be the expected exchange rate between Argentina peso (AP) and the US dollar at the end of 2017 Explain why 2 Discuss the main strengths and weaknesses of each of the following theories of FX rate determination a ) PPP b ) Asset market approach to the FX rate determination c ) MonetaryapproachtoFXratedetermination 3 The Federal Reserve sets the target growth rate of money (M1) at 2 from now until the end of this year, while the European Central Bank (ECB) sets its target growth rate of money at 7 during the same period The current spot rate is $1 12 per euro What do you expect will be the spot rate at the end of this year Explain why Which theory do you apply for your forecasting 4 Please define and update the so called TED spread (which we discussed in class) up to recent years Discuss the main implications of the sudden changes of the TED spread on global lending and borrowing What have been the examples of those sudden changes

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Please answer each question in full with explanations for me to accept the answer. 1. [FX forecasting using Purchasing Power Parity] The expected inflation rate

Please answer each question in full with explanations for me to accept the answer.

1. [FX forecasting using Purchasing Power Parity] The expected inflation rate until the end of next year, 2017, is 2% in the US, and 12% in Argentina, respectively. The current spot exchange rate between Argentina peso (AP) and the US dollar is AP15.0/$. What will be the expected exchange rate between Argentina peso (AP) and the US dollar at the end of 2017? Explain why.

2. Discuss the main strengths and weaknesses of each of the following theories of FX rate determination.

a.) PPP
b.) Asset market approach to the FX rate determination
c.) MonetaryapproachtoFXratedetermination

3. The Federal Reserve sets the target growth rate of money (M1) at 2% from now until the end of this year, while the European Central Bank (ECB) sets its target growth rate of money at 7% during the same period. The current spot rate is $1.12 per euro. What do you expect will be the spot rate at the end of this year? Explain why. Which theory do you apply for your forecasting?

4. Please define and update the so-called TED spread (which we discussed in class) up to recent years. Discuss the main implications of the sudden changes of the TED spread on global lending and borrowing. What have been the examples of those sudden changes?