The U.S. risk-free rate is 2.1% and the expected inflation rate is 6.2%. If the expected inflation rate in Vietnam is 9.6%, what is the implied risk-free rate in Vietnam? Between 2% and 4% Between 4% and 6% Between 6% and 10% None of the above
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The U.S. risk-free rate is 2.1% and the expected inflation rate is 6.2%. If the expected inflation rate in Vietnam is 9.6%, what is the implied risk-free rate in Vietnam?
Between 2% and 4%
Between 4% and 6%
Between 6% and 10%
None of the above
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- Suppose that the real interest rate in Japan and the U.S. is 2.00%. Furthermore, assume that the nominal (1-year) interest rate in Japan is 11.00% while the nominal interest rate over the same time period in the United States is 8.00%. According to the international Fisher effect theory, the expected inflation rate in Japan is % is % while the expected inflation rate in the U.S.Suppose that the nominal interest rate in the euro area is 2%, and the nominal interest rate in Switzerland is 4%. Suppose inflation is expected to be 0.5% in the euro area. If the Fisher Effect holds, then the real interest rate in the euro area is approximately the expected inflation in Switzerland is O2%; impossible to determine. 1.5%; 2.5% 2.5%; 0.5% None of the above is correct. 1.5%; 0.5% and3. If the inflation rate in China is of 7%. The Currency spot exchange rate is JPY17.30/CNY and one year expected spot exchange rate is JPY 17.20/CNY. What should be the inflation rate in Japan? 0.06381% 6.381% 7.62209% 0.0762209%
- Suppose the year 1, year 2 and year 3 forecasts for the rate of inflation in Denmark are 3%, 4% and 5% respectively. Suppose also that the year 1, year 2 and year 3 forecasts for the rate of inflation in France are 11%, 9% and 8% respectively. If the expected spot rate between the Danish Krone (DKK) and the EUR is EUR0.1344/DKK at the end of year 3, what is the current spot rate? a.EUR0.119024/DKK b.EUR0.151762/DKK c.EUR0.111027/DKK d.EUR0.128269/DKK e. Not enough information to answer this question.Suppose the year 1, year 2 and year 3 forecasts for the rate of inflation in Denmark are 3%, 4% and 5% respectively. Suppose also that the year 1, year 2 and year 3 forecasts for the rate of inflation in France are 11%, 9% and 8% respectively. If the expected spot rate between the Danish Krone (DKK) and the EUR is EUR0.1344/DKK at the end of year 3, what is the current spot rate? a. EUR0.119024/DKK b. EUR0.151762/DKK c. EUR0.128269/DKK d. EUR0.111027/DKK e. Not enough information to answer this question.The spot rate for the Japanese yen currently is A??Y107 per $1. The one-year forward rate is A??Y106 per $1. A risk-free asset in Japan is currently earning 7 percent. If interest rate parity holds, what rate can you earn on a one-year risk-free U.S. security? 6.07 percent 7.94 percent 8.01 percent 8.08 percent 6.00 percent
- Suppose that the Eurozone is the domestic country and the United States is the foreign country. The spot exchange rate quote is S=e:$ = $1.25. Suppose further that the expected annual U.S. inflation rate is 8.91 percent and the expected Eurozone annual inflation rate is 12.87 percent. Calculate the expected spot rate and the approximate expected spot rate one year awayWhich of the following events would most likely result in an appreciation of the U.S. dollar? A. The Fed indicates that it will raise U.S. interest rates. B. U.S. inflation is very high. C. Future U.S. interest rates are expected to decline. D. Japan is expected to increase interest rates in the near future.Use the information below to answer the following questions. Currency per U.S. $ 1.2380 1.2353 Australia dollar 6-months forward Japan Yen 6-months forward U.K. Pound 6-months forward 100.3600 100.0200 .6789 .6784 Suppose interest rate parity holds, and the current six month risk-free rate in the United States is 5 percent. Use the approximate interest rate parity equation to answer the following questions. a. What must the six-month risk-free rate be in Australia? (Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What must the six-month risk-free rate be in Japan? (Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Australian risk-free rate b. Japanese risk-free rate c. Great Britain risk-free rate c. What must the six-month risk-free rate be in Great Britain? (Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) % % %
- Suppose the expected rate of inflation in year 1 and year 2 is 3% p.a. and 4% pa. respectively in Australia. What must the constant annual expected rate of inflation be in the US such that the exchange rate today is the same at the end of year 27 O a. 7.000% O b 7.1225% Oc 5.4925% O d. 3.4988%The spot rate between Japan and the U.S. is ¥100.37 = $1, while the one-year forward rate is ¥99.97 = $1. A one-year risk-free security in the U.S. is yielding 3.8 percent. What is the rate of return on a one-year risk-free security in Japan assuming that interest rate parity exists?In the spot market, $1 is currently equal to £.55. The expected inflation rate in the U.K. is 4 percent and in the U.S. 3 percent. What is the expected exchange rate two years from now if relative purchasing power parity exists? £.5391 £.5445 £.5555 £.5611 £.5667