Suppose the nominal interest rate in the U.S. is 8% per year, the nominal interest rate in Brazil is 15% per year, and today’s spot rate is S ($/BRL) =0.49. Assuming that the International Fisher Effect holds, what is the expected spot rate S90 ($/BRL) in three months?
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Suppose the nominal interest rate in the U.S. is 8% per year, the nominal interest rate in Brazil is
15% per year, and today’s spot rate is S ($/BRL) =0.49. Assuming that the International Fisher Effect
holds, what is the expected spot rate S90 ($/BRL) in three months?
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- Suppose the nominal interest rate in the U.S. is 5% per year, the nominal interest rate in Brazil is 10% per year, and today's spot rate is S ($/BRL) = 0.24. If the International Fisher Effect holds, what are the expected spot rates S ($/BRL) in three months, 6 months, and 1 year?Suppose the spot rate for the Canadian dollar is CAD1.034 = USD1, the 3-month forward rate is CAD1.036 = USD1, and the 1-year forward rate is CADS1.039. = USD1. If no other information is available, what will be your guess about the spot rate in 1 year?Assume that the Ghanaian inflation rate is expected to average about 9% annually, while the Nigerian inflation rate is expected to average about 4% per annum. If the current spot rate between the naira and cedi is N140/GHC, what is the expected spot rate between the two currencies in two years? Assume PPP hold?
- Assume that Ghanaian inflation rate is expected to average about 9% annually, while the Nigerian inflation rate is expected to average about 4% per annum. If the current spot rate between the naira and the cedi is N140/GHC, what is the expected spot rate between the two currencies in two years? Assume PPP holds?Currently, you canexchange 1 euro for 1.25 dollars in the 180-dayforward market, and the risk-free rate on 180-daysecurities is 6% in the United States and 4% inFrance. Does interest rate parity hold? If not, whichsecurities offer the highest expected return?Assume the spot rate on the Singapore Dollar is .6920 and the 6-month forward rate is .6929. Also assume interest rate parity holds and the current annual risk-free rate in the United States is 3.3 percent. What must the six-month risk-free rate be in Singapore?
- Suppose that the exchange rate is $0.92/Euro. The dollar-denominatedinterest rate is 4% and the euro-denominated interest rate is 3%.u = 1.2, d = 0.9, T = 0.75, n = 3, and K = $1.00.a. What is the price of a 9-month European put?b. What is the price of a 9-month American put?) Suppose the spot exchange rate for the Hungarian Forint is HUF 209/USD. The infiation rate in the US is 3.5% per year and 5.7% in Hungary. What do you predict the exchange rate will be in two-years? _What is the-expected appreciation or depreciation of the USD over this period?Suppose the spot and six-month forward rates on the Norwegian krone are Kr 5.77 and Kr 5.92, respectively. The annual risk-free rate in the United States is 3.57 percent, and the annual risk-free rate in Norway is 5.27 percent. What would the six-month forward rate need to be on the Norweigan krone to prevent arbitrage?
- Using the UIP equation, assume that the expected future rate (after one year) for euros (in terms of dollars) equals $1.20, while the current spot rate is 1.15. The current interest rate on euro deposits is 2%, and the interest rate on dollar deposits is 3%. Should you invest in the US or in Europe? Neither one In the US In Europe It is indifferentAssume that the Australian dollar's spot rate is $1.25 and that the Australian and U.S 1 year interest rates are initially 8%. Then assume that the Australian 1-year interest rate increases by 5% points, while the U.S 1 year's interest rate remains unchanged. Using this information and the international fisher effect (IFE) theory, forecast the spot rate for 1 year ahead. (a) $2.33 (b) $1.19 (c) $4.67 (d) $6.78Suppose that the U.S. interest rate on one year Treasury notes was 4.7%. We will use this as the annual interest rate in the U.S. And suppose that the interest rate on the one-year German Treasury note was 4.2%. The spot rate is 1.0162 EUR/USD. And the 3-month forward rate is 1.0188 Eur/USD. Is there an opportunity for covered interest arbitrage? If so, what would be the total profit if we borrowed $25 million? OA YES-$27,395.21 would be the profit OB. YES-$33,385.41 would be the profit OC. YES-$37,342.89 would be the profit OD. NO- there is no opportunity for a profit
