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Susan, a Swiss investor, wants to diversify her portfolio internationally, so her financial advisor recommended that she obtain the expected exchange rate at the end
Susan, a Swiss investor, wants to diversify her portfolio internationally, so her financial advisor recommended that she obtain the expected exchange rate at the end of the year and thus be able to evaluate her opportunities to increase her assets. To do this, they reported on the inflation and interest rates of Switzerland and Sweden and found the following information:
Switzerland Sweden
Annual inflation 2.3% 2.5%
Interest rate 2.6%. 2.8%
Spot exchange rate as of June 31, 202X 1.6837 CHF / SEK Market exchange rate as of December 31, 202X 1.6349 CHF / SEK
According to the theory of parity in purchasing power, what is the expected exchange rate as of December 31, 202X?
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Intermediate Financial Management
Authors: Eugene F Brigham, Phillip R Daves
9th Edition
032431986X, 9780324319866
