Consider the following data. Suppose the expected exchange rates are the average expectations by investors for exchange rates in one year. Imagine that the interest rates are for equally risky assets and are annual rates. Current exchange rate Us - Australia 1.80$US$ Singapore 1.75S$/US$ Expected Exchange Rate US- Australia 1.90 A$/US$ Singapore 1.65 S$/US$ Current Interest Rate (%) US 2.0 Australia 4.0 Singapore 1.0 a. Calculate the rate of return for a U.S. dollar investor investing in the Australian deposit for one year. b. Calculate the rate of return for a U.S. dollar investor investing in the Singapore deposit for one year. c. Among these three options (United States, Australia, and Singapore), where is the best place for the investor to invest? Where is the worst place? 1.Consider the following data. Suppose the expected exchange rates are the averageexpectations by investors for exchange rates in one year. Imagine that the interest rates arefor equally risky assets and are annual rates.United StatesAustraliaSingaporeCurrent Exchange Rate1.80 A$/US$ 1.75 S$/US$Expected Exchange Rate1.90 A$/US$ 1.65 S$/US$Current Interest Rate (%)2.04.01.0a. Calculate the rate of return for a U.S. dollar investor investing in the Australian depositfor one year.b. Calculate the rate of return for a U.S. dollar investor investing in the Singapore depositfor one year.c. Among these three options (United States, Australia, and Singapore), which is the bestplace for the investor to invest? Which is the worst place?

The rate of return (RoR) is the net profit or loss of an investment over a period of time and is…

Answered: Consider the following data. Suppose…

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: A Macroeconomic Theory Of The Open Economy

Section: Chapter Questions

Problem 7PA

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Consider the following data. Suppose the expected exchange rates are the average expectations by investors for exchange rates in one year. Imagine that the interest rates are for equally risky assets and are annual rates. Current exchange rate Us - Australia 1.80$US$ Singapore 1.75S$/US$ Expected Exchange Rate US- Australia 1.90 A$/US$ Singapore 1.65 S$/US$ Current Interest Rate (%) US 2.0 Australia 4.0 Singapore 1.0 a. Calculate the rate of return for a U.S. dollar investor investing in the Australian deposit for one year. b. Calculate the rate of return for a U.S. dollar investor investing in the Singapore deposit for one year. c. Among these three options (United States, Australia, and Singapore), where is the best place for the investor to invest? Where is the worst place?

1.
Consider the following data. Suppose the expected exchange rates are the average
expectations by investors for exchange rates in one year. Imagine that the interest rates are
for equally risky assets and are annual rates.
United States
Australia
Singapore
Current Exchange Rate
1.80 A$/US$ 1.75 S$/US$
Expected Exchange Rate
1.90 A$/US$ 1.65 S$/US$
Current Interest Rate (%)
2.0
4.0
1.0
a. Calculate the rate of return for a U.S. dollar investor investing in the Australian deposit
for one year.
b. Calculate the rate of return for a U.S. dollar investor investing in the Singapore deposit
for one year.
c. Among these three options (United States, Australia, and Singapore), which is the best
place for the investor to invest? Which is the worst place?

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