Answered: inflation

Business

Accounting

inflation

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter9: Forecasting Exchange Rates

Section: Chapter Questions

Problem 5BIC

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Question

#68

The risk-free rate is

3.7%,

and expected inflation is

2.4%.

If inflation expectations change such that future expected inflation falls to

2.1%,

what will the new risk-free rate be?

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