What spot exchange should one forecast 5 years into future, Financial Management

Assignment Help:

The current spot exchange rate is Dr240/$1.00. Long-run inflation in Greece is calculated at 8 percent yearly and 4.5% in the United States.  If PPP is expected to hold among the two countries, what spot exchange should one forecast 5 years into the future?

Solution:  Dr240(1 + .08)5/(1 + .045)5 = Dr283/$1.00.


Related Discussions:- What spot exchange should one forecast 5 years into future

Dow jones global index (djgi), Dow Jones Global Index (DJGI) The DJGI a...

Dow Jones Global Index (DJGI) The DJGI aims to cover 95% of market capitalisation at country level. As with FTSE and MSCI, there are the same 23 developed markets, but with gre

Considerations before a mbo, Considerations before a MBO An MBO is just...

Considerations before a MBO An MBO is just like any other take over and same consideration must be applied. (i)  Potential of the business. Is it worth buying? What does the

Estimate the money in dollars have lost or gained, In January 2010 your fir...

In January 2010 your firm bought from an Italian firm goods payable in Euros worth EU2,000,000.  Suppose that at that time the exchange rate of the Euros was 1EU=$1.25.  Because th

What are the main criticisms of the payback method, How do we calculate the...

How do we calculate the payback period for a proposed capital budgeting project?  What are the main criticisms of the payback method? We calculate the reimbursement period for

Corporate debt, which critically examines the benefits and risks to a compa...

which critically examines the benefits and risks to a company, of incorporating corporate debt into a portfolio of equity and debt.

Municipal bonds, 1. Tax-backed debt and 2. Revenue bonds ...

1. Tax-backed debt and 2. Revenue bonds are two types of municipal bonds.

Operating cycle, make an cash conversion cycle of cabbages

make an cash conversion cycle of cabbages

What are factors influenced the shape of the yield curve, What are number o...

What are number of factors that influence the shape of the yield curve? There are some of factors which influence the shape of the yield curve as follows: (1) Expectations

Interpretations of profitability ratio''s, Interpretations of Profitability...

Interpretations of Profitability Ratio's - ROA:       ROA or the Return on Assets ratio is the ratio of net profit to total assets and this ratio indicates whether total assets

Write Your Message!

Captcha
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