The annual inflation rate in the U.S is expected to be 2.19 percent and the annual inflation rate in Poland is expected to be 4.45 percent. The current spot rate between the zloty and dollar is Z4.1136/$. Assuming relative purchasing power parity holds.

What will the exchange rate be in four years?

The one-year risk-free rate in the U.S. is 4.98 percent and the one-year risk-free rate in Mexico is 7.52 percent. The one-year forward rate between the Mexican peso and the U.S. dollar is MXN12.42/$.

 What is the spot exchange rate?

The spot rate between the U.K. and the U.S. is E.7534/$, while the one-year forward rate is E.7524/$. The risk-free rate in the U.K. is 4.27 percent and risk-free rate in the United States is 2.58 percent.

 How much in profit can you earn on $9,000 utilizing covered interest arbitrage?

Answer rating: 100% (QA)

To calculate the exchange rate in four years we can use the formula for relative purchasing power pa... View the full answer