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Expected exchange rate next year

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Reference no: EM133133818

Q1 The interest rate in Pakistan is 0.4, the exchange rate is 1.0 and market participants expect the exchange rate next year to be 0.9.

  • 0.15
  • 0.30
  • 0.10
  • 0.25

Q2 The interest rate in Iran is 0.20, the exchange rate is 4.0, the forward rate is 4.0 and the risk premium is 0.15.

  • 0.10
  • 0.05
  • -0.05
  • 0.20

Q3 Panama has a fixed exchange rate with the U.S dollar. The exchange rate is 1.0. Suppose interest rates in the U.S are 0.15 while interest rates in Panama are 0.05. The spot exchange rate next year is expected to be.

  • 1.10
  • 0.95
  • 1.0
  • 0.90

Q4 The interest rates in the U.S is 0.05. The interest rates in Venezuela is 0.50. The current exchange rate is 1.0. The expected exchange rate next year is 0.80. The risk premium is

  • 0.10
  • -0.05
  • -0.25
  • 0.25

Reference no: EM133133818

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