Question: Question 3 10 points Save Answer Suppose you are using a fundamental model to forecast the exchange rate of British pound in a quarter: et+1

Question 3 10 points Save Answer Suppose you are using a

Question 3 10 points Save Answer Suppose you are using a fundamental model to forecast the exchange rate of British pound in a quarter: et+1 0.09+-0.2INTt+0.2INFt where et+ 1 is the expected percentage change in the exchange rate over the next quarter, INT is the quarterly interest rate differential and INF is the quarterly inflation rate differential. The quarterly data are not available, so you obtained annual data instead and plan to convert them to quarterly data. The most recent annual interest rates are 3.31% in the US and 3.68% in the UK The most recent annual inflation rates are 2.1% in the US. and 2.52% in the UK Today the spot rate is $1.1376. Estimate the exchange rate in a quarter. Round to four decimal places. Example $1.1234

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