Actual future nominal exchange rate

Assignment Help Macroeconomics
Reference no: EM131326471

According to interest rate parity, if the interest rate offered by a home asset is iH%, the interest rate offered by a foreign asset is iF% and the current spot exchange rate is et (from home's perspective, that is, the price of one unit of the foreign currency is equal to 2 units of the home currency), what is the expected future nominal exchange rate et+1? answer 1.98.

Continue with the previous question: The value of the home currency is expected to 

Answer: Appreciate by 1%.

Continue with the previous question: Suppose the actual future nominal exchange rate et+1 turns out to be higher than what you have calculated in Question #28. If you had already bought the foreign asset, you will ____ this mistake. Your purchase of this foreign asset has been measured as a ____ value in Canada's capital account.

Answer Gain from; negative

Could somebody please explain all this in detail please why this is?

Reference no: EM131326471

Questions Cloud

Which source is less predictable and why : How do you justify the fact that H(Z) H(X) + H(Y )? Why?
What is gain or loss on the early extinguishment of the bond : ACCT311: What is the gain or loss on the early extinguishment of the bonds? Based on this information, what is the amount of net cash flows from financing activities?
Marginal principle for consumers : Equal Marginal Principle a. Write down the equal marginal principle for consumers. b. When does this condition hold?
What is your impression of some of the core buddhist beliefs : What is your impression of some of the core Buddhist beliefs and which Buddhist teachings caught your attention most
Actual future nominal exchange rate : Continue with the previous question: Suppose the actual future nominal exchange rate et+1 turns out to be higher than what you have calculated in Question #28. If you had already bought the foreign asset, you will ____ this mistake. Your purchase o..
Discuss the profile of a serial arsonist : Discuss the profile of a Serial Arsonist. Provide an example of a criminal case where arson was used as a precautionary act (choose a case that is not in your textbook)
Prime minister of per-fidia : 1) You are the economic advisor to Sir Bufton Tufton, the Prime Minister of Per- fidia. The Bank of Perfidia is pegging the exchange rate of the local currency, the Perfidian albion. The albion is pegged to the wotan, which is the currency of the ..
Estimate the consequence of hanjins case : The case of Hanjin, one of the world's largest shipping lines, has had and will continue to have a major effect on the international shipping industry.Assess the implications of Hanjins demise to commercial practices in the shipping industry with..
Explain in detail the technology of geographical profiling : Explain in detail how the technology of Geographical Profiling as evolved over the past 20 years and how it is being used successfully today by law enforcement

Reviews

Write a Review

Macroeconomics Questions & Answers

  Rival firms in the same market will increase market power

Antitrust authorities at the Federal Trade Commission are reviewing your company’s recent merger with a rival firm. The FTC is concerned that the merger of the two rival firms in the same market will increase market power. A hearing is scheduled for ..

  Compare the effect of the tanf program on work

Suppose a single parent can work up to 16 hours per day at a wage rate of $10.00 per hour. Various income maintenance programs have been developed to assure a minimum level of income for low-income families, such as Aid to Families with Dependent ..

  Price discrimination by firm-its consequences on consumer

A firm with costs C(Q) = 1,000 + 60Q + 0.1Q2 is able to price-discriminate-What would happen if it were forced to charge all its customers the same price?

  Why economists call the pigouvian taxes

Suppose the demand for artificial tanning is very elastic, while the demand for sugary soda is not. Compare the effects of two equal sized taxes on the equilibrium market price, the equilibrium quantity consumed, and the tax revenue raised.

  Who sets prices in the market

Who sets Prices in the Market: The consumers, The Middleman, The Businesses (the seller) and/or the Government? Examples?

  Consumption at equilibrium level of income

Suppose planned investment falls by 100. Graphically illustrate using the AE-Y graph the effects of this reduction in planned investment on the economy. Also calculate the new equilibrium level of income.

  Characteristics of some renewable resources

However, the reputable presumption for some renewable resources is precisely the opposite. What general characteristics of some renewable resources bring this about?

  Use this while making decisions about public expenditures

Explain how do you plan to use this while making decisions about public expenditures.

  Determine the equilibrium price and equilibrium quantity

If my comapny operates in a competitive market and competes with many other domestic and foreign firms.

  You are the chairperson of the federal reserve the date is

you are the chairperson of the federal reserve the date is june 2008 and a recession is ahead. using the monetary tools

  Find the new interest rate

You need to find the new interest rate that is required to stimulate I. the increase in I has to be sufficient to push the overall Y level back to the original Y level that you have found in (i).

  National bureau of economic research identify the turning

Why doesn’t the National Bureau of Economic Research identify the turning points in economic activity until months after they occur?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd