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Suppose the current spot exchange rate between the United States and the United Kingdom is 1.4339 USD/GBP. Also suppose the current interest rates are 5

  1. Suppose the current spot exchange rate between the United States and the United Kingdom is 1.4339 USD/GBP. Also suppose the current interest rates are 5 percent in the U.S. and 7 percent in the U.K. What is the expected spot exchange rate 12 months from now according to the international Fisher effect? Also, using the formal expression of the international Fisher Effect, calculate the expected percentage change in the exchange rate for GBP.

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