Suppose the spot and three-month forward rates for the yen are ¥79.45 and ¥78.84, respectively. What would you estimate is the difference between the annual inflation rates of the United States and Japan? (A negative answer should be indicated by a minus sign. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Annual inflation rate differential %

Suppose the spot and three-month forward rates for the yen are ¥79.45 and ¥78.84, respectively. What would you estimate is the difference between the annual inflation rates of the United States and Japan? (A negative answer should be indicated by a minus sign. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Annual inflation rate differential %

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter8: Relationships Among Inflation, Interest Rates, And Exchange Rates

Section: Chapter Questions

Problem 4ST

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Finance Suppose the spot and three-month forward rates for the yen are ¥79.70 and ¥79.04, respectively. b. What would you estimate is the difference between the annual inflation rates of the United States and Japan
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Suppose that exchange rate between the dollar and the peso is in equilibrium when inflation in the U.S. rises to 5.00%. At the same time, inflation in Mexico is 3.50%. If the inflation rate in the U.S. is denoted as I and the inflation rate in Mexico is If, then which of the following expressions represents the percent change in the peso under PPP? 1+If 1+In 1+In 1+1 - - 1 1 0.0145 -1.43% 1+/ +1 1+1 198.57% 1+If 1+1h +1 201.45% According to this formula, percentage change in the peso should be under PPP.
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