Illustrates the interest rate parity theorem

Assignment Help Microeconomics

Reference no: EM132174745

Question: The treasurer of a company in Mexico borrowed $10,000 in dollars at a 12 percent rate when the exchange rate was 9 pesos to the dollar. His company paid the loan plus interest 1 year later, when the exchange rate was 9.5 pesos to the dollar.

A. What rate of interest was paid, based on the pesos received and paid by the treasurer?

B. Show how your result illustrates the interest rate parity theorem.

Reference no: EM132174745

Questions Cloud

Analyze and state importance of this workplace capability : Summarize what Workplace Capability Perseverance mean to you. Analyze and state the importance of this Workplace Capability to your current and future career

What was the percentage devaluation or revaluation : In March 1991, the U.S. dollar was worth 137 yen. In October 2000, the rate was 108 yen. What was the percentage devaluation or revaluation of the dollar.

General term for cell cycle regulatory proteins : a. What is the general term for cell cycle regulatory proteins?

Determine one of the most important or surprising things : Determine one (1) of the most important or surprising things you learned in this course. You will then explain why this was surprising to you.

Illustrates the interest rate parity theorem : The treasurer of a company in Mexico borrowed $10,000 in dollars at a 12 percent rate when the exchange rate was 9 pesos to the dollar.

Identify seven different works from the gothic period : Identify seven different works from the Gothic period and the Fourteenth Century in Europe select one each from the seven categories listed.

Why are there not many dominantly-inherited disorders : Why are there not many dominantly-inherited disorders? (Think about the individual with a dominantly inherited disorder).

What are three different types of performance appraisals : What are three different types of performance appraisals that can be offered and how can they be applied to a training effort?

Reasons why microfinance can potentially benefit women : Provide at least three reasons why microfinance can potentially benefit women. Provide at least three reasons why, relative to men, women may be better.

User Account

All Pages