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 that are the subject of Chapter 6 of the book, and the other discussions we have had in this regard (e.g., lecture notes AMP06 and Amp07). Use the more accurate approach. 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.