Using the following data on spot exchange rate of Poland against the U.S. dollar and the annual interest rates of these two countries, forecast the outright values of 6 and 12 months ahead of the Polish currency. Draw on the forecasting theories or parities

Polish currency is called Zloty (= PLN)

Spot rate PLN 4.17/USD

US commercial interest rate 3.5 percent

Polish commercial interest rate 5.00 percent

Review the following questions. When you are ready, enter your responses on Canvas (in the tab Quizzes, WA02). Thank you.

1. The outright forecast for 6 months is:

2. The outright forecast for 12 months is:

3. The theory that you are using is called:

Purchasing power parity

Interest rate parity

Fisher effect

International fisher effect

None of the answers in this group is correct.

4. This theory holds very well in the:

Short-run

Long-run

Chaotic periods only

None of the answers in this group is correct.

5. Based on this theory, the country that offers a higher rate of interest should expect a fall in the value of its currency.

I agree

I disagree

You really cannot tell

Never heard of such a thing!

None of the answers in this group is correct.