As of today, assume the following information is available Real rate of interest required by investors....

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As of today, assume the following information is available Real rate of interest required by investors. Nominal interest rate Spot rate One-year forward rate U.S 12% Mexico 2% 16% $0.19 $0.16 a. Use the forward rate to forecast the percentage change in the Mexican peso over the next year. Use a minus sign to enter a negative value, if any, If the answer is zero, enter "0" Round your answer to two decimal places b. Use the differential in expected inflation to forecast the percentage change in the Mexican peso over the next year. Use a minus sign to enter a negative value, if any. If the answer is zero, enter "0" Round your answer to two decimal places. c. Use the spot rate to forecast the percentage change in the Mexican peso over the next year. Use a minus sign to enter a negative value, if any, If the answer is zero, enter"0". Round your answer to two decimal places. The following graph plots the percentage change in the spot rate for a foreign currency along the horizontal axis, while measuring the interest rate differential (between a home country and a foreign country) along the vertical axis. fa refers to the interest rate in the home country, while it refers to the interest rate in a foreign country. On the following graph, use the blue line (circle symbol) to plot the combinations of percentage change of the foreign currency spot rate and interest. rate differential that are consistent with the international Fisher effect (IFE) theory. in-/(9) 4 2 4 5 6 7 6 5 4 3 2 1 Change in Fore 1 2 3 4 5 6 7 Currency Spot Rate (5 IFE Line ? As of today, assume the following information is available Real rate of interest required by investors. Nominal interest rate Spot rate One-year forward rate U.S 12% Mexico 2% 16% $0.19 $0.16 a. Use the forward rate to forecast the percentage change in the Mexican peso over the next year. Use a minus sign to enter a negative value, if any, If the answer is zero, enter "0" Round your answer to two decimal places b. Use the differential in expected inflation to forecast the percentage change in the Mexican peso over the next year. Use a minus sign to enter a negative value, if any. If the answer is zero, enter "0" Round your answer to two decimal places. c. Use the spot rate to forecast the percentage change in the Mexican peso over the next year. Use a minus sign to enter a negative value, if any, If the answer is zero, enter"0". Round your answer to two decimal places. The following graph plots the percentage change in the spot rate for a foreign currency along the horizontal axis, while measuring the interest rate differential (between a home country and a foreign country) along the vertical axis. fa refers to the interest rate in the home country, while it refers to the interest rate in a foreign country. On the following graph, use the blue line (circle symbol) to plot the combinations of percentage change of the foreign currency spot rate and interest. rate differential that are consistent with the international Fisher effect (IFE) theory. in-/(9) 4 2 4 5 6 7 6 5 4 3 2 1 Change in Fore 1 2 3 4 5 6 7 Currency Spot Rate (5 IFE Line ?

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a Using the forward rate the percentage change in the Mexican peso over the next year can be calcula... View the full answer