8975

/in /by

All interest and inflation rates are stated as annual rates.
Purchasing power parity
1. If the spot market exchange rate for the British pound is 1.3964, the expected inflation rate for the UK for the next year is 2.60%, and the expected inflation rate for the US for the next year is 2.35%, what is the expected exchange rate for the British pound in one year?
2. If the spot market exchange rate for the Indian rupee is 64.85, the expected inflation rate for India for the next six months is 5.05%, and the expected inflation rate for the US for the six months is 2.15%, what is the expected exchange rate for the Indian rupee in six months?
3. If the spot market exchange rate for the New Zealand dollar is 0.7314, the expected inflation rate in New Zealand is 1.75%, and the expected inflation rates for the in the US is 2.75% what is the expected exchange rate for the New Zealand dollar in two years?
International Fisher effect
4. If the spot market exchange rate for the Brazilian real is 3.2396, the 1-year Central Bank of Brazil interest rate is 9.75%, and the 1-year interest rate on US Treasuries is 2.25%, what is the expected exchange rate for the Brazilian real in one year?
5. If the spot market exchange rate for the Australian dollar is 0.7851, the 3-month Reserve Bank of Australia interest rate is 1.99%, and the 3-month interest rate on US Treasury debt is 1.35%, what is the expected exchange rate for the Australian dollar in three months?
6. If the spot market exchange rate for the Tanzanian shilling is 2259.5, the 3-year interest rate in Tanzania is 12.00%, and the 3-year interest rate in the US is 2.45%, what is the expected exchange rate for the Tanzanian shilling in 3 years?
Unbiased forward rate (forward expectation parity)
7. If the spot market exchange rate for the euro is 1.1237 and the 6-month forward quote is 111, what is the expected exchange rate for the euro in six months?
8. If the spot market exchange rate for the Japanese yen is 106.97 and the 1-year forward quote is -204, what is the expected exchange rate for the Japanese yen dollar in one year?
9. If the 3-month futures price for Korean won is 0.0009311, what is the expected exchange rate for Korean won in three months?

Attachments:

assignment-4-….docxParity-condit….docx