Using the following data on spot exchange rate of Poland against the U.S. dollar and the annual

inflation 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 4.26/USD

US inflation rate 2.2 percent

Polish inflation rate 4.4 percent

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

Quizzes, WA03). 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 apply to my work.

4. This theory holds very well in the:

Short-run

Long-run

Chaotic periods only

None of the answers in this group are correct.

5. Based on this theory, the country that has a higher rate of inflation should expect a rise 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 are correct

I need help with questions 3,4,5