Unformatted text preview: higher return. 26) What should be the interest rate in the eurozone (assume that there are no differences in risk, liquidity, or information characteristics), according to the nominal interest rate parity condition? - 1.35-1.5/1.5= -0.10 12% - (10%)= 2% When the foreign nominal interest rate is higher than the domestic nominal interest rates, the domestic currency depreciated....
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This note was uploaded on 03/17/2008 for the course ECON 351 taught by Professor Bayraktarnihal during the Spring '08 term at Penn State.
- Spring '08