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Question 2 Currently, an ounce of gold costs USD 1715, and CHF 1673. One year ago, it cost USD 1681, and CHF 1648. Assume the

Question 2

Currently, an ounce of gold costs USD 1715, and CHF 1673. One year ago, it cost USD 1681, and CHF 1648. Assume the Law of One Price holds for this question.

a.What is the current spot rate between USD and CHF?

b.What is the USD inflation rate?

c.What is the CHF inflation rate?

d.What would you expect the USD to CHF spot rate to be in 1 year?

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