Question
Using CIP intuition: 1. If dollar interest rate is 4% higher than Yuan interest rate, then investors expect dollar to appreciate ______% relative to Yuan.
Using CIP intuition:
1. If dollar interest rate is 4% higher than Yuan interest rate, then investors expect dollar to appreciate ______% relative to Yuan. (answer can be positive or negative)
2. If investors expect euro to appreciate 10% relative to Mexican peso, and interest rate in Europe is 5%, then interest rate in Mexico is ______%.
3. A Chinese investor is speculating US housing market. He strongly expects housing price in US to go up by 12% in the year 2022 and US $ will depreciate 3% relative to Yuan in 2022. What is the gross return if the Chinese investor converts his Yuan into $, buy the house at beginning of 2022, hold it for 1 year, sell it at the end of 2022, then convert $ back to Yuan?
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