This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Assuming that the interest parity condition holds, what type of information is contained in interest ... (Read 116 times)

corkyiscool3328

  • Hero Member
  • *****
  • Posts: 539
on: Jun 30, 2018
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
Reply #1 on: Jun 30, 2018
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
Excellent

parshano

  • Member
  • Posts: 333
Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

« previous next »
 

Did you know?

Stevens-Johnson syndrome and Toxic Epidermal Necrolysis syndrome are life-threatening reactions that can result in death. Complications include permanent blindness, dry-eye syndrome, lung damage, photophobia, asthma, chronic obstructive pulmonary disease, permanent loss of nail beds, scarring of mucous membranes, arthritis, and chronic fatigue syndrome. Many patients' pores scar shut, causing them to retain heat.

Did you know?

The senior population grows every year. Seniors older than 65 years of age now comprise more than 13% of the total population. However, women outlive men. In the 85-and-over age group, there are only 45 men to every 100 women.

Did you know?

Nearly 31 million adults in America have a total cholesterol level that is more than 240 mg per dL.

Did you know?

In the United States, congenital cytomegalovirus causes one child to become disabled almost every hour. CMV is the leading preventable viral cause of development disability in newborns. These disabilities include hearing or vision loss, and cerebral palsy.

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.

DNA is biological information DNA is biological information
Psoriasis. This photograph demonstrates the characteristic white skin patches of this condition. Psoriasis. This photograph demonstrates the characteristic white skin patches of this condition.
Discharge summary information Discharge summary information
A Bluetooth adapter that plugs into the DLC and transmits global OBD II information to a smart phone ... A Bluetooth adapter that plugs into the DLC and transmits global OBD II information to a smart phone ...
Determine the nominal annual rate of interest of the following ordinary general annuity. Determine the nominal annual rate of interest of the following ordinary general annuity.
Video: Oral Hygiene & Braces Animation

For a complete list of videos, visit our video library