Question 1

If inflation in the next 12 months is expected to be 4% and investors in general require a real rate of return of 2%. What should be the 12-month interest rate?

Question 2

If interest rate is 4.5% in Canada and 8% in Mexico, according to IFE, what should be the percentage change in the value of CAD1 against Mexico Peso (MXN) in the future?

Question 3

If interest rate is 4.5% in Canada and 3% in UK, according to IFE, what should be the percentage change in the value of GBP1 against CAD in the future?

Answer rating: 100% (QA)

Question 1 To calculate the 12month interest rate we can use the Fisher equation Nominal interest ra... View the full answer