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Unformatted text preview: g. Over the past year, the number of Cherokees sold in Korea should have increased; YES. Cherokees also should be cheaper in Korea [if the $ price did not change, that is now fewer Won], so more should have been sold. h. Over the past year, the number of Cherokees sold in Korea should have fallen; NO. i. Probably, Korean interest rates are even lower than US ones, if interest rate parity holds; YES. If you had taken a $, changed it to Won a year ago, and then changed it back to $ now, you would have made a profit [got more than a $ back $(1,309/1,205) to be precise] even with no interest. So if expectations were correct, Korean interest rates should have been lower than US ones. Interest rates on appreciating currencies are generally lower than on depreciating ones. j. Probably, Korean interest rates are higher than US ones, if interest rate parity holds. NO....
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This note was uploaded on 05/22/2011 for the course ECO 2013 taught by Professor Denslow during the Spring '05 term at University of Florida.
- Spring '05