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What should be the one year forward

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Britain and the U.S. produce just one good - beef. The price of beef in the U.S. is $2.80 per pound, and in Britain it is £3.70 per pound.

According to PPP theory, what should the $/£ spot exchange rate be?

Suppose the price of beef is expected to rise to $3.10 in the U.S. and to £4.65 in Britain. What should be the one year forward $/£ exchange rate?

Reference no: EM132014995

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