Define the fisher effect states

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Reference no: EM131592094

The fisher effect states:

a. the real interest rate in any country equals the nominal rate of interest plus the expected rate of inflation

b. spot exchange rate between countries is determined by the difference in actual rates of inflation between the two

c. the nominal interest rate in any country equals the real rate of interest plus expected rate of inflation

d. the difference in the national interest rates for security of similar riskh and maturity should be equal to but opposite in sign to the foreword rate discount or premium for foreign currency

Reference no: EM131592094

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