Why might purchasing power parity fail to hold

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Reference no: EM131367782

1. Does interest rate parity imply that interest rates are the same in all countries?

2. Why might purchasing power parity fail to hold?

3. A currency trader observes that in the spot exchange market, 1 U.S. dollar can be exchanged for 9 Mexican pesos or for 111.23 Japanese yen. What is the crossexchange rate between the yen and the peso; that is, how many yen would you receive for every peso exchanged?

Reference no: EM131367782

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