that the current exchange rate is 1, but it is expected to be £1.69= § ar. If the current interest rate on a government bonf in the united sta at dies the interest rate parity indicate the interest rage will be c at government bond in Germany?
that the current exchange rate is 1, but it is expected to be £1.69= § ar. If the current interest rate on a government bonf in the united sta at dies the interest rate parity indicate the interest rage will be c at government bond in Germany?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
![the question in the picture says:
Suppose that the current exchange rate is
£1.73 = $1, but it is expected to be £1.69= $1
in one year. If the current interest rate on a
one year government bonf in the united states
is 5%, what dies the interest rate parity
condition indicate the interest rage will be on
a one yeat government bond in Germany?
assume that there are no differences in risk,
liquidity, taxation, or informatjon costs
between the bonds.
The German interest rage will be _%?
(Round your response to two decimal places.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe25cc011-3f7b-4eb1-a1b6-17d8d45af470%2Ffe71392a-bfab-4cd0-89ea-e46f01e56a61%2F3lg9pad_processed.jpeg&w=3840&q=75)
Transcribed Image Text:the question in the picture says:
Suppose that the current exchange rate is
£1.73 = $1, but it is expected to be £1.69= $1
in one year. If the current interest rate on a
one year government bonf in the united states
is 5%, what dies the interest rate parity
condition indicate the interest rage will be on
a one yeat government bond in Germany?
assume that there are no differences in risk,
liquidity, taxation, or informatjon costs
between the bonds.
The German interest rage will be _%?
(Round your response to two decimal places.)
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