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Question 6 Following information is available. U.S.A. Europe 4% 6% One-year nominal rate of interest One-year expected inflation 2% 5% Spot rate USD 1.14/EUR One-year
Question 6 Following information is available. U.S.A. Europe 4% 6% One-year nominal rate of interest One-year expected inflation 2% 5% Spot rate USD 1.14/EUR One-year Forward rate USD1.10/EUR 1) Using the Relative Purchasing Power Parity, forecast the future spot rate one year from now. 2) Using the International Fisher Effect, forecast the future spot rate one year from now. (1 + i) (1+) (1+1) (1+M Els / Soy So
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