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 122 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
Gracias!


JCABRERA33

  • Member
  • Posts: 344
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

 

Did you know?

The top 10 most important tips that will help you grow old gracefully include (1) quit smoking, (2) keep your weight down, (3) take supplements, (4) skip a meal each day or fast 1 day per week, (5) get a pet, (6) get medical help for chronic pain, (7) walk regularly, (8) reduce arguments, (9) put live plants in your living space, and (10) do some weight training.

Did you know?

People with alcoholism are at a much greater risk of malnutrition than are other people and usually exhibit low levels of most vitamins (especially folic acid). This is because alcohol often takes the place of 50% of their daily intake of calories, with little nutritional value contained in it.

Did you know?

Allergies play a major part in the health of children. The most prevalent childhood allergies are milk, egg, soy, wheat, peanuts, tree nuts, and seafood.

Did you know?

An identified risk factor for osteoporosis is the intake of excessive amounts of vitamin A. Dietary intake of approximately double the recommended daily amount of vitamin A, by women, has been shown to reduce bone mineral density and increase the chances for hip fractures compared with women who consumed the recommended daily amount (or less) of vitamin A.

Did you know?

As the western states of America were settled, pioneers often had to drink rancid water from ponds and other sources. This often resulted in chronic diarrhea, causing many cases of dehydration and death that could have been avoided if clean water had been available.

For a complete list of videos, visit our video library