Questions are based on Thailand time period: 2001-2006. How do you calculate questions 1-5? Charts are below
Question:
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Questions are based on Thailand time period: 2001-2006.
How do you calculate questions 1-5? Charts are below to help calculate.
Please answer the following five questions:
Q1. During the assigned time period:
US dollar appreciated / depreciated (choose one) in real terms against the currency of foreign
country.
Q2. During the assigned period, what was the average uncovered rate of return from the US
viewpoint for the foreign country?
Q3. During the assigned period, what was the average uncovered rate of return from the foreign
country's viewpoint?
Q4. Based on your answers to questions 2 and 3, given perfect hindsight about interest rates and
exchange rate changes during the assigned time period you should have:
Invested/ borrowed (choose one) in the US and invested / borrowed (choose one) in foreign
country.
Q5. Assume that you could both borrow and invest at the average interest rates prevailing in
foreign country and in the US during the assigned time period. Also assume that you have a line
of credit for one million dollars in the US or an equivalent amount in foreign country. Given
perfect hindsight about interest rates and exchange rate changes, please calculate your total
profit in dollars using uncovered interest arbitrage during the assigned time period if you
followed the strategy chosen in Q4.
![image text in transcribed](https://s3.amazonaws.com/si.experts.images/answers/2024/06/667ba35d8545e_781667ba35d592c0.jpg)
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