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sergejj [24]
3 years ago
8

One-year interest rates are currently 2.50% in the United States and 3.70% in Great Britain. The current spot rate between the p

ound and dollar is $1.9000/£. What is the expected spot rate in one year if the international Fisher effect holds?
Business
1 answer:
DochEvi [55]3 years ago
3 0

Answer:

$1.8780/£

Explanation:

According to the international Fisher effect, the relationship between the interest rate and the exchange rate between two countries A and B, after one year, is:

F=\frac{1+r_A}{1+r_B}*C

Where F is the future exchange rate, r is the interest rate, and C is the current exchange rate.

If the US has an interest rate of 2.50%, the UK has a rate pf 3.70% and the current exchange rate is $1.9000/£, the spot rate in one year will be:

F=\frac{1+0.0250}{1+0.037}*1.9000\\F = \$1.8780/\pounds

In one year, the spot rate will be $1.8780/£.

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Answer:

On October 01, 2017

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________ leaders inspire followers to transcend their self-interests for the good of the organization and can have an extraordin
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