Question: Tarheel Co. plans to determine how changes in U.S. and Mexican real interest rates will affect the value of the U.S. dollar. a. Describe a

Tarheel Co. plans to determine how changes in U.S. and Mexican real interest rates will affect the value of the U.S. dollar.

a. Describe a regression model that could be used to achieve this purpose. Also explain the expected sign of the regression coefficient.

b. If Tarheel Co. thinks that the existence of a quota in particular historical periods may have affected exchange rates, how might this be accounted for in the regression model?

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a Various models are possible One model would be Change a 0 a 1 r US r M u in peso Where r ... View full answer

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