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Unformatted text preview: = $2/£ and the spot rate in t=1 of e 1 = $2.10/£. What is the % appreciation/depreciation of the $? ANS:_________________ NAME___________________________ 4) Given the SR = $2/£ , and FR 90 =$1.99/£ and r US = 5% and r UK = 8%, a) Calculate r * (the home country currency rate of return). b) Would you see inward or outward interest arbitrage? 5) Given: r US = 7% and r FR = 12% and the spot rate e = $0.50/FF (French Franc), find the 1 year forward rate f 1 . 6) Given e = $2/£, and i US = 4%, and i UK = 1%, where i is the respective rates of inflation. Find e 1 ....
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- Fall '11
- International Economics, 1%, Forward contract, 4%, Forward price, $1.99, $2.10