Suppose that the rate of returns on U.S dollar is 2% and the rate of return on Japanese yen (¥) is 2.5%. Under interest parity, find the ratio of the current to the expected exchange rate (Ɛ/Ɛ)?

If the nominal exchange rate e is foreign currency per dollar, the domestic price is P, and the foreign price is P*, what is the definition of the real exchange rate?

If the current U.S. interest rate is 10% and PPP is expected to hold, what should be the Canadian interest rate to maintain interest parity?

Uncovered interest parity condition (UIP) says that the expected rate of depreciation of the one country’s currency in terms of another country’s currency exchange rate is equal to

Based on the Exchange rates above, Which of the following is true? A)More pounds are needed to buy a dollar, so the dollar is appreciating B)The dollar is less expensive in pounds and is depreciating C)The dollar is growing stronger against the pound D)The dollar is more expensive in pounds and is appreciating Year 2014 2015 2016 US $ 1$ 1$ 1$ British Pound .85 .70 .60

Given the interest parity condition, the demand for domestic bonds would decrease if domestic interest rates decreased. In a market where the domestic interest rate is 3.1%, the foreign interest rate is 1.1% and the current exchange rate is 95.00, the future expected exchange rate must be decimal places.) for the interest parity condition to hold. (Round your response to two

The equation for purchasing power parity is – the domestic price should equal the exchange rate multiplied by the foreign price. Suppose your shirt sells for 10 euros in Europe.  If purchasing power parity holds, what should be the price of that same shirt in the United States if it takes 1.145 dollars to get one euro?

The dollar appreciated by 25% relative to the yen and the direct exchange rate is now 0.01 in the US. Find the old exchange rate prior to the dollar appreciation.

Identify two factors (or characteristics of economy) that underlie a nation’s decision to adopt a fixed exchange rate or a floating exchange rate.

Suppose that at some point the spot exchange rate is equal to 100 yen per one U.S. dollar, while the interest rate in dollars is 6% and the interest rate in yen is 1%. What is the approximate forward rate that is consistent with this situation?