# IFMCh5 - Chapter 5 N h h h h h 4 J 4 4 H I 4 d N 3 ~ [email protected]]G...

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@ Chapter 5 , h ¸ª 4 h ( h ¸ª 4 h ¸ª 4 h I

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@ Chapter 5 4 (PPP) d ,4 h 4 (the Law of One Price) h 4 (HC)
@ Chapter 5 4 d , o U 4 d , o U 4 d , o U 4 FC US P e P × = \$ (5 - 1) FC US P P e \$ = 1000 600 \$ SF US [ h ] h e = = US\$0.6/SF

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@ Chapter 5 M h 5-1d , d ,4 h FC US PI e PI × = \$ (5 - 2) FC US PI PI e \$ = (5 - 2)
@ Chapter 5 d ,4 4 0 0 \$ 0 FC US PI PI e = (5 - 5) ) ( ) ( ) ( 1 1 \$ 1 FC US PI E PI E e E = (5 - 6)

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@ Chapter 5 ( ) [ h h ] 0 1 ) ( e e E = ) ( ) ( 1 1 \$ FC US PI E PI E 0 0 \$ FC US PI PI 0 \$ 1 \$ ) ( US US PI PI E 0 1 ) ( FC FC PI PI E (5 - 7) = 0 \$ 1 \$ ) ( US US PI PI E e US \$ 1 π + = 0 1 ) ( FC FC PI PI E e FC π + 1 =
@ Chapter 5 ( ) 0 1 ) ( e e E e FC e US π π + + 1 1 \$ (5 - 8) = e FC e FC e US e e e E π π π + - = - 1 ) ( \$ 0 0 1 (5 - 9) e FC e US e e e E π π - - \$ 0 0 1 ) ( (5 - 10)

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@ Chapter 5 h % è \$ US FC r PI PI e e × = ( 5 - ) 4 e US e FC r e e \$ 1 1 π π + + × = ( 5 - ) 11
@ Chapter 5 PPP 4 h n a 65 . 0 ) ( 5 e E 5 5 %) 1 1 ( %) 3 1 ( + + SF US e E / 7169 . 0 \$ ) ( 5 = = n e FC n e US n e e E ) 1 ( ) 1 ( ) ( \$ 0 π π + + = (5 -12) e US \$ π e SF π [ h ] h = 4% , = 1% , e 0 = US\$0.65/SF h 5 h

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@ Chapter 5 ( GFE ) ˜ d , I 4 X 4 (i) h (Fisher Effect) XÉ@¸ (ii) h d , e r i π += r i e - = π (5 -13) or FC US r r = \$ (5 -16) e FC e US FC US i i π π - = - \$ \$ (5 -17) GFE:
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