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Questions 3 and 4 please. (international financial management). please show all your work. 3. As of today, the spot exchange rate is 1.00 = $1.25
Questions 3 and 4 please. (international financial management). please show all your work.
3. As of today, the spot exchange rate is 1.00 = $1.25 and the rates of inflation expected to prevail for the next year in the U.S. is 2 percent and 2.5 percent in the euro zone. What is the one-year forward rate that should prevail? (Use ratio version) 4. If the annual inflation rate is 5 percent in the United States and 4 percent in the U.K., and the pound appreciated against the dollar by 3 percent, then what is the real exchange rate, assuming that PPP initially held? (Use ratio version)
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