Question: Using the following information, answer the problems below. Each part is independent of one another, i.e. b) is not related to d) State your answers

Using the following information, answer the problems below. Each part is independent of one another, i.e. b) is not related to d) State

Using the following information, answer the problems below. Each part is independent of one another, i.e. b) is not related to d) State your answers to four decimal places. Spot rates of the US Dollar on December 8, 2017 Mexican Peso (MXP) to US Dollar (USD): 18.5369 US Dollar (USD) to British Pound (GBP): 1.3352 Expected inflation rates for the year ending December 8, 2018: USA: 1.0%, Mexico: 5.5%,UK:3.5% Annual interest rates for the year ending December 8,2018 : USA: 2.0%, Mexico: 6.0%,UK:4.0% If a currency forecaster predicted that the peso would depreciate by 10% against the US dollar by this time next year, what would you expect the MXP/USD rate to be on December 8, 2018? Assume that purchasing power parity holds. What would you expect the USD/GBP rate to be on December 8, 2018? Assume that interest rate parity holds. What would you expect the MXP/USD rate to be on December 8,2018

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