Question: Following information is available. One-year nominal rate of interest One-year expected inflation Spot rate One-year Forward rate U.S.A. 4% Edit Format Table 2% Europe

Following information is available. One-year nominal rate of interest One-year expected inflation Spot rate One-year Forward rate U.S.A. 4% Edit Format Table 2% Europe 6% USD1.14/EUR USD1.10/EUR 5% 1) Using the Relative Purchasing Power Parity, forecast the future spot rate one year from n 2) Using the International Fisher Effect, forecast the future spot rate one year from now.

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