This topic contains a solution. Click here to go to the answer

Author Question: Assuming that the interest parity condition holds, what type of information is contained in interest ... (Read 127 times)

corkyiscool3328

  • Hero Member
  • *****
  • Posts: 539
Assuming that the interest parity condition holds, what type of information is contained in interest rate differentials between domestic and foreign bonds? Explain.
 
  What will be an ideal response?

Question 2

For this question, assume that individuals form expectations of inflation according to the following equation et = t-1. From 1970 on, the value of  for this equation
 
  A) increased over time and approached 1.
  B) decreased over time and approached zero.
  C) remained constant at zero.
  D) remained constant at negative one.
  E) none of the above



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

sokh

  • Sr. Member
  • ****
  • Posts: 357
Answer to Question 1

Given that the domestic rate equals the foreign interest rate minus any expected rate of appreciation of the domestic currency, any difference in interest rates will reflect this expected depreciation/appreciation of the domestic currency.

Answer to Question 2

A




corkyiscool3328

  • Member
  • Posts: 539
Reply 2 on: Jun 30, 2018
:D TYSM


bitingbit

  • Member
  • Posts: 323
Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

 

Did you know?

About 600,000 particles of skin are shed every hour by each human. If you live to age 70 years, you have shed 105 pounds of dead skin.

Did you know?

The oldest recorded age was 122. Madame Jeanne Calment was born in France in 1875 and died in 1997. She was a vegetarian and loved olive oil, port wine, and chocolate.

Did you know?

There can actually be a 25-hour time difference between certain locations in the world. The International Date Line passes between the islands of Samoa and American Samoa. It is not a straight line, but "zig-zags" around various island chains. Therefore, Samoa and nearby islands have one date, while American Samoa and nearby islands are one day behind. Daylight saving time is used in some islands, but not in others—further shifting the hours out of sync with natural time.

Did you know?

Computer programs are available that crosscheck a new drug's possible trade name with all other trade names currently available. These programs detect dangerous similarities between names and alert the manufacturer of the drug.

Did you know?

The modern decimal position system was the invention of the Hindus (around 800 AD), involving the placing of numerals to indicate their value (units, tens, hundreds, and so on).

For a complete list of videos, visit our video library