What is spot rate implied by interest rates for the franc

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1. During 1995, the Mexican peso exchange rate rose from Mex$5.33/US$ to Mex $7.64/US$. At the same time, U.S. inflation was approximately 3% in contrast to Mexican inflation of about 48.7%.

a. By how much did the nominal value of the peso change during 1995?

b. By how much did the real value of the peso change over this period?

2. Suppose three-year deposit rates on Eurodollars and Eurofrancs (Swiss) are 12% and 7%, respectively. If the current spot rate for the Swiss franc is $0.3985, what is the spot rate implied by these interest rates for the franc three years from now?

Reference no: EM131278483

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