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Q.3: When you consider the interest rate parity condition, all variables except the expected exchange rate are observable for the current period. According to this:
Q.3: When you consider the interest rate parity condition, all variables except the expected exchange rate are observable for the current period. According to this: a. Solve the interest rate parity condition for the expected exchange rate, which is the only unobservable variable (what will the expected exchange rate equal?). (25 points) b. If you could give this solution a name, what would it be? (10 points) Q.3: When you consider the interest rate parity condition, all variables except the expected exchange rate are observable for the current period. According to this: a. Solve the interest rate parity condition for the expected exchange rate, which is the only unobservable variable (what will the expected exchange rate equal?). (25 points) b. If you could give this solution a name, what would it be? (10 points)
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