Need urgent answer ASAP PROBLEM 3 (20 POINTS) Upline securities, a Moroccan Investment bank, does not believe that the International Fisher Effect (IFE) holds Current 1 year investment rate in Europe is 7 , while 1 year interest rate in Morocco is 4 They convert 10,000,000 MAD to Euros and invest them in France One year later, they conver t the Euros back to Moroccan Dirhams The current spot rate of the Euro is MAD 0 10 According to the IFE, explain the movement of the spot rate of Euro in 1 year and determine its value If the spot rate of the Euro in 1 year is MAD 0 15, what is Upline Securities return from this strategy If the spot rate of the Euro in 1 year is MAD 0 08, what is Upline Securities return from this strategy What must the spot rate of the Euro be in 1 year for Upline Securities to be successful PROBLEM 4 (10 POINTS) Assume US one year interest rate is 3 and the one year interest rate on Australian dollar is 6 The US expected inflation is 5 while the Australian inflation is expected to be 7 You have 1 000 000 USD to invest for 1 year and believe Purchasing Power Parity holds The spot exchange rate of an Australian dollar is 0 689$ What will be the yield on your investment if you invest in the Australian Market

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Question: Need urgent answer ASAP PROBLEM 3 (20 POINTS) Upline securities, a Moroccan Investment bank, does not believe that the International Fisher Effect (IFE) holds. Current

Need urgent answer ASAP

PROBLEM 3 (20 POINTS)

Upline securities, a Moroccan Investment bank, does not believe that the International Fisher Effect (IFE) holds.

Current 1 year investment rate in Europe is 7%, while 1-year interest rate in Morocco is 4%.

They convert 10,000,000 MAD to Euros and invest them in France. One year later, they conver.t the Euros back to Moroccan Dirhams. The current spot rate of the Euro is MAD 0.10.

According to the IFE, explain the movement of the spot rate of Euro in 1 year and determine its value?

If the spot rate of the Euro in 1 year is MAD 0.15, what is Upline Securities return from this strategy?

If the spot rate of the Euro in 1 year is MAD 0.08, what is Upline Securities return from this strategy?

What must the spot rate of the Euro be in 1 year for Upline Securities to be successful?

PROBLEM 4 (10 POINTS):

Assume US one-year interest rate is 3% and the one-year interest rate on Australian dollar is 6%.

The US expected inflation is 5% while the Australian inflation is expected to be 7%.

You have 1.000.000 USD to invest for 1 year and believe Purchasing Power Parity holds.

The spot exchange rate of an Australian dollar is 0.689$.

What will be the yield on your investment if you invest in the Australian Market?

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