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saw5 [17]
3 years ago
13

The inflation rate in Great Britain is expected to be 4% per year, and the inflation rate in Switzerland France is expected to b

e 6% per year. If the current spot rate is £1 = SF 12.50, what is the expected spot rate in two years? A) SF12.99 B) SF 10.25 C) SF 11.44 D) SF 8.50 E) None of the above
Business
1 answer:
VladimirAG [237]3 years ago
5 0

Answer:

The spot rate in two years time = SF 12.99

Explanation:

The purchasing power parity states that the relationship between the current and future spot rate between two currencies can be linked to the differences in the expected inflation rate between the currency.

This relationship can be expressed as follows:

S1=  So× (1 + hc)/(1 + hb)

So= Current spot rate, Hc- inflation rate in Switzerland, Inflation rate in Britain

Spot rate in a year's time

S1= 12.50, Hc=6%, Hc=4%

S1= 12.50× (1.06/1.04)

S1=12.74

Spot rate in two year's time

S1= 12.74× (1.06/1.04)

S1= 12.99

The spot rate in two years time = SF 12.99

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<h3>What is a journal entry?</h3>

It should be noted that a journal entry is used to record the financial activities of a company.

In this case, the journal entry for the purchase of inventory on account using the perpetual inventory system is to record the sale and another one to record the cost of the good.

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brainly.com/question/24868116

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A manager from another restaurant says to you, "I’ve heard that Barcelona has a three-step hiring process. Candidates first have
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Explanation:

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Assume that activity G has the following times: Early start time 7 days Early finish time 13 days Late start time 15 days Late f
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What is<br> the relationship between supply and<br> demand and price ?
valina [46]

The more supply the lower the price

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3 years ago
Read 2 more answers
Two athletes of equal ability are competing for a prize of $10,000. Each is deciding whether to take a dangerous performance-enh
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a) attached below.

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Explanation:

<u>a) 2 * 2  payoff matrix  describing the decision faced by the athletes </u>

attached below

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