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Which one of the following theories links spot rates to nominal interest rates around the world? The relative PPP (purchase power parity) The Big Mac
Which one of the following theories links spot rates to nominal interest rates around the world? The relative PPP (purchase power parity) The Big Mac Index theory The international fisher effect The absolute PPP (purchase power parity) The exchange rate pass-through theory points Amanda Smyth is a foreign exchange dealer for a bank in Texas. She has USD 1.000.000 for a short term money market investment and wonder if she should invest in US dollars for six months or make a covered interest arbitrage ICIA) investment in the Japanese yen. Amanda decides to make the CIA investment, would she have to enter into a forward contract today? Why? No, Amanda will sell US dollars at the spot rate at maturity Yes to sell US dollars forward No, Amanda will convert yen to dollars at the spot on matury Yes, to sell Japanese yen forward Yes, to buy Japanese yen forward
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