2. If US raises its rate to 6%, what is the new spot rate according to the Asset Market Theory?

D4) Finance If the foreign interest rate is 4%, the risk premium on domestic assets, ρ, is 18%, and the expected rate of depreciation of the domestic currency against the foreign currency is 3%, what is the domestic interest rate in percentage terms, given covered interest parity holds? [All variables have a 1-year time frame.]

2. If the current inflation rate is 3.6% and you have an investment opportunity that pays 10.9%, then what is the real rate of interest on your investment? Please use both exact formula and approximate formula.

D6) If the foreign interest rate is 4%, the risk premium on domestic assets, ρ, is 18%, and the expected rate of depreciation of the domestic currency against the foreign currency is 3%, what is the domestic interest rate in percentage terms, given covered interest parity holds? [All variables have a 1-year time frame.]

Suppose there are no transaction costs. If the one year forward rate of the euro is an accurate estimate of the spot rate one year from now, then the actual cost of hedging payable will be: A. positive if the forward rate exhibits a premium, and negative if the forward rate exhibits a discount. B. positive. C. negative. D. zero.

Analyze the implications of interest rate changes on the original calculation (Origninal WACC 8%). What are the consequences or benefits for WACC decreasing? What are the consequences or benefits for WACC increasing?

If the risk-free rate is 2.2 percent, the inflation rate is 1.9 percent, and the market rate of return is 6.8 percent, what is the amount of the risk premium on a U.S. Treasury bill? O 2.8% O 0.5% O 1.7% « > A Moving to another question will save this response.

What will be forward rate if the current spot rate is €1= $1.40 and the risk-free rate in America and Europe is 5% and 4.30% respectively. A. $1.3907 B. $1.4520 C. $2.2220 D. $1.6253

Let in and if represent the nominal 1-year interest rates for a home and foreign country, respectively. According to the international Fisher effect (IFE) theory, which of the following best represents the predicted change in the foreign currency ef? O ○ ef = ef = 1-in 1-i 1+if 1+i - - 1 1 ○ ef 1+in ○ ef = +1 1+i ○ ef = 1+in 1+if - 1

This is part a) question and it's answer in order to answer part b) question Question: You hold a consol that pays a coupon C in perpetuity. The current interest rate is i, and the average expectation in the market is that this will remain unchanged. What will be the price of the consol today? answer : According to the question we need to calculate the current price of the perpetual consol. Perpetual consoles are priced differently because their expected income is spread through an indefinite period. So, perpetual consoles are priced using the current yield.  The current yield is calculated as:- coupon amountMarket price×100coupon amountMarket price×100 After calculating the current yield price is calculated by the above formula where, i = Current interest rate  y = yield so, the price of this consol will be  Price = i/y I please need the solutions for part b)  question b)  In the next period however, the interest rate changes unexpectedly to i . What is the new price of the bond? If…