What does the interest-rate parity condition indicate

Reference no: EM133265047

Question - Macro Economics Discussion

Suppose that the current exchange rate is €1.73=£1, but it is expected to be €1.65=£1 in one year. If the current interest rate on a one-year government bond in the United Kingdom is 10%, what does the interest-rate parity condition indicate the interest rate will be on a one-year government bond in Germany? Assume that there are no differences in risk, liquidity, taxation, or information costs between the bonds.

Reference no: EM133265047

Questions Cloud

What amount should be reported as interest income for 2022 : What amount should be reported as loan impairment loss for 2021 and What amount should be reported as interest income for 2022? show solution.

National association for advancement of colored people : The National Organization for Women, the National Association for the Advancement of Colored People, and the Hispanic American Organization are groups who are w

What is the default risk premium (drp) on koys bonds : bonds is found with the formula MRP = (t - 1) × 0.1%, where t = number of years to maturity. What is the default risk premium (DRP) on Koy's bonds

Components of health-related physical fitness : 1. Contrast and define the following terms: physical activity, exercise and physical fitness.

What does the interest-rate parity condition indicate : Suppose that the current exchange rate is €1.73=£1, but it is expected to be €1.65=£1 in one year. What does the interest-rate parity condition indicate

Identify baumrind four styles of parenting : Describe and identify Baumrind's four styles of parenting. Be sure to include a discussion of levels of demandingness and responsiveness for each style.

Does the corporation have any liabilities : Does the corporation have any liabilities with respect to pensions, vacation pay, or warranties? Please let us know what a contingent liability is and if your

How to calculate efn if the company had a net profit : How to calculate EFN if the company had a net profit of 2649 million, and what to make a special dividend payout of 3 million? Their previous dividend ratio was

What distinguishes property and equipment from other assets : What distinguishes property and equipment from other assets June might have, such as inventory and accounts receivable? At what value are property

User Account

All Pages