Please help with all of the following questions. Thanks! Interest rate parity Th
ID: 2670769 • Letter: P
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Please help with all of the following questions. Thanks!
Interest rate parity The opened inflation rate in the united States greater than the expected inflation rate in Japan. Assume that the two countries have the same real risk-free rate and have the same political, Of country, risk. All else being equal, the Japanese yen is expected to: Appreciate relative to the U.S. dollar Deprecate relative to the U.S. dollar Appreciate relative to major currencies other than the U.S dollar Appreciate relative to all major currencies Remain unchanged relative to the U.S. dollar Suppose a U.S. currency trader noticed that in the three-month forward market, the Swiss franc sells at a premium, while the British pound at a discount. Assume interest rate parity holds. which of the following statements about interest rates is correct? The United States should have the highest three-month interest rates and Great Britain should have the lowest rates. The three-month interest rates In the United States, Switzerland, and Great Britain should all be the same. Switzerland should have the highest three-month interest rates and Great Britain should have the lowest rates. The United States should have the highest three-month Interest rates and Switzerland should have the lowest rates. Great Britain should have the highest three-month interest rates and Switzerland should have the lowest rates.Explanation / Answer
4) Option 1 is correct Japanese Yen is expected to Appriciate relative to the US dollar. Reason: As because of Inflation the US currency Value will be declined.Hence the Purcashing Power of the 1 U .S Dollar became cheaper than 1 Japanese yen Glabally. Hence When trade made between US and Japan ,The Japaneese Yen Will be appriciated relatively With US dollar. __________________________________________________________________ b) The last option is correct. That is Great Britan should have Highest three months Interest rates , and switzerland should have lowest returns. Reason : In this contract Britan Pownd sells at discount ,It means that the interest rates are highe at out side in coming three months and Swiss franc sells at Premium means vice versa. Thak You...
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