2. If the inflation rates in the British pound and the US $ are 4% and 1% respectively, while the exchange rate is 1 pound exchanges for $2, what will the future spot rate be?
3. If the interest rates are .07 and .05 in Argentina and Canada respectively, what will
happen to the peso versus the Canadian dollar, if presently they exchange as 10 pesos for
4. We have the following information. The spot exchange rates now and expected in a year
from now between the South African rand and the Mali West African franc (CFA) is .02
and .025 S. A. rand per CFA. The forward rate between the two currencies is .225 S.A.rand
per CFA. How would we speculate in the spot markets and in the forward one to attain a
profit? Presuppose, we have the equivalent of 10 million rand.
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