Ch 22 International Parity for Foreign Exchange

Ch 22 International Parity for Foreign Exchange -...

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System of Four Parity Conditions Inputs $1.3640 13 US Riskfree Rate (Annual) 4.47% 4 US Inflation Rate 2.69% 2 Outputs 4 (4) International Fisher Effect Eurozone Riskfree Rate (Annual) 4.27% 4.27% (1) Interest Rate Parity Forward Exchange Rate (€1 =) $1.3614 (2) Expectations Theory of Exch Rates Expect Fut Spot Exch Rate (€1 =) $1.3614 (3) Purchasing Power Parity Eurozone Inflation Rate 2.49% Four Parity Conditions expressed as One Percent Difference equals Another Percent Difference Eurozone Riskfree Rate % Diff -0.19% Forward Exch Rate % Diff -0.19% Exp Fut Spot Exch Rate % Diff -0.19% I NTERNATIONAL P ARITY Spot Exchange Rate ( 1 =) Expectations Theory of Exchange Rates: Exp Fut Spot Exch Rate % Diff = Forward Exch Rate % Diff Purchasing Power Parity: Eurozone Inflation Rate % Diff = Exp Fut Spot Exch Rate % Diff International Fisher Effect: Eurozone Riskfree Rate % Diff = Eurozone Inflation Rate % Diff Interest Rate Parity: Forward Exch Rate % Diff = Eurozone Riskfree Rate % Diff
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Eurozone Inflation Rate % Diff -0.19% Estimating Future Exchange Rate Inputs $1.3460
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Ch 22 International Parity for Foreign Exchange -...

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