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Question 1 (2 points) The interest rate in the U.S. is 4%, while the interest rate in Switzerland is 7%. The spot rate for the
Question 1 (2 points) The interest rate in the U.S. is 4%, while the interest rate in Switzerland is 7%. The spot rate for the Swiss franc is $1.04 per CHF. According to the international Fisher effect (IFE), the Swiss franc should adjust to a new level of: $1.070 $1.040 $1.032 $1.011 Question 2 (2 points) Which of the following is NOT true regarding the IRP, PPP, and IFE? IRP suggests that a currency's spot rate will change according to interest rate differentials. PPP suggests that a currency's spot rate will change according to inflation differentials. The IFE suggests that a currency's spot rate will change according to interest rate differentials. All of the above are true
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