Question

assume that the interest parity condition holds. also assume that the u.s. interest rate is 8% while the u.k. interest rate is 6%. given this information, financial markets expect the pound to:

Answer 1

Assume that the interest parity condition holds. also assume that the u.s. interest rate is 8% while the u.k. interest rate is 6%. given this information, financial markets expect the pound to appreciate by 2%.

What Kinds of Financial Markets Are There?

The stock market, bond market, foreign exchange market, commodities market, and real estate market are a few examples of financial markets and their functions. Financial markets can also be divided into listed vs. OTC markets, primary vs. secondary markets, capital markets, money markets, and listed vs. money markets.

How Do the Financial Markets Function?

All financial markets operate primarily by bringing together buyers and sellers of some asset or contract and allowing them to transact with one another, despite encompassing a wide range of asset classes and having a variety of structures and laws. A process for price discovery or an auction is frequently used for this.

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