What should be the interest rate in the eurozone

Assignment Help Econometrics
Reference no: EM13222779

If the current exchange rate is €1.5/£1 and is expected to fall to €1.45/£1 next year, and if the current nominal interest rate in the United Kingdom is 8%, what should be the interest rate in the eurozone (assume that there are no differences in risk, liquidity, or information characteristics), according to the nominal interest rate parity condition?

Reference no: EM13222779

Questions Cloud

Explain how many times faster will the reaction occur : The activation energy of a certain reaction is 77.3 kj/mol. How many times faster will the reaction occur at 41 degrees celcius than at 0 degrees celcius?
Explain nuclear disintegrations per second : The activity of a radioactive sample is the number of nuclear disintegrations per second, which is equal to the first-order rate constant times the number of radio-active nuclei present.
Explain natural and petroleum gas : A reactor is used to decompose toxic H2S gas (that was removed from natural and petroleum gas). The reaction is given as:H2S (v) = 2H2 (v) + S2 (l)
Explain air filled with bugs at concentration : Imagine you are driving at speed 60 mph through air filled with bugs at concentration 1 per cubic meter. The windshield is a flat panel of area 2 m^2 tilted so that it is at 60 degrees with the ground. How many bugs will you collect in 5 min?
What should be the interest rate in the eurozone : If the current exchange rate is €1.5/£1 and is expected to fall to €1.45/£1 next year, and if the current nominal interest rate in the United Kingdom is 8%, what should be the interest rate in the eurozoneaccording to the nominal interest rate pari..
Explain how large an oxygen candle needed to supply oxygen : Ignoring any side reactions and assuming the reaction occurs completely, how large (in kg) an oxygen candle (KClO3) would be needed to supply 8 people with enough oxygen for 24 hours on a small submarine?
What is the mad : use exponential smoothing with a smoothing constant of 0.3 to forecast the registrations at the seminar given in problem 4.10 to begin the procedure, assume that the forecast for year 1 was 5.000 people signing up. what is the MAD?
What would be its cost under each of the three choices : Which process offers the lowest cost to produce 40,000 units? What is that cost?
What characteristics of an effective work group : What characteristics of an effective work group does the Speed Team appear to have and to what extent was a team structure really necessary to carry out the mission of the Speed Team

Reviews

Write a Review

Econometrics Questions & Answers

  Determine at what price level the total revenue be maximum

The weekly demand and supply functions for seats on flights between Syracuse and Boston have been estimated as follows: Qd = 1600 - 2.5 Price + .040 Income - 4 Weather + 1.20 Pa ( where Pa is the price of alternative means of travel )

  How many bottles of water does patrik drink in april

In April Patrick receives a 5% pay increase. Meanwhile the inflation raises the price of concerts to $10.50 and the price of Celtic Springs Water to $2.10. Draw Patrick's new budget constraint and optimal consumption bundle.

  Determine what is the cost of the option hedge

Raider Inc., an American importing firm anticipates an outflow of ¥893 million in 6 months. Raider's management team is worried about the course of the ¥/$ exchange rate over the next 6 months and decides to hedge.

  Solve the budget line and find the coefficient

Suppose the consumer has $100 to spend on consumptionnow (c1) or consumption next year (c2). Any money not spent now can be deposited in a bank account, accumulating interest at an annual rate of 10%, and then withdrawn for spending next year. The..

  Where should the manufacturing plant be located

A firm is considering moving its manufacturing plant from Chicago to a new location. The industrial engineering department was asked to identify the various alternatives together with the costs to relocate the plant, and the benefits.

  What nominal and effective rates of return per year

A 12% $50,000 bond is offered for sale at $45000. If the bond interest is payable monthly and the bond matures in 20 years, what nominal and effective rates of return per year will the purchaser make on the investment

  Calculate the dividend yield and the capital-gains yield

A stock was priced at $150 per share at the end of 2007. The following table shows dividends per share paid during each year and the price of the stock at the end of the year for the following four years: Dividends Paid Stock Price at Year During ..

  How much are households paid for providing entrepreneurship

suppose tht businesses buy a total of 100$ billion of the four resources(labor, land, capital and entreprenrial ability) from households. If households receive 60$ billion in wages, 10$ billion in rent and 20$ billion in interest

  Find all amounts that cannot be used as prices

Although it is impossible to make a pile of money worth exactly $3, it is still possible to buy something that costs $3. You can give two $7 bills to the cashier and receive one $11 bill as change. There are two different ways to make $120.

  What is the long-run cost and long-run average to produce

What is the long-run cost and long-run average to produce 120 units 180 units 240 units are there economies the output range 120 to 180 are there diseconomies between 180 and 240 Q L K 120 4 20 180 6 ..

  What was the growth of velocity between these two years

During this holiday, he gave his first Fireside Chat, a radio address where he explained his policies to the American people in plain language. After the four-day holiday, he still kept one-third of all U.S. banks closed (mostly small farmer banks..

  What is unemplotment rate if labor market is competitivie

In a paticular industry labor supply is Es=10+w and labor demand is Ep=70-3w where E is the level of employment and w is the hourly wage. A. what is the quilibrium wage and employment if the labor market is competitivie? What is the unemplotment rat..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd