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Assume these simple exchange rate relationships to answer the questions below Forward rate equals the expected spot rate. The interest differential between two countries must be equal to the difference between the forward and spot exchange rates Changes in exchange rates tend to match differences in inflation rates. 0. Dollar interest rate = 5.2% Laputian interest rate = 10.4%; 1-year forward exchange rate = LAP100 = USD1 What is the current spot exchange rate? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) Current spot exchange rate LAP per dollar b. Current Lilliputian exchange rate = LIL 40 - USD1: expected exchange rate at end of year=LIL45 = USD Lilliputian 1.year interest rates 152%. What is the US dollar interest rate? (Do not round Intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Interest rate % b. Current Liliputian exchange rate = LIL40 = USD1, expected exchange rate at end of year = LIL45 = USDT, Lilliputian 1-year interest rate - 15.2%. What is the U.S. dollar interest rate? (Do not round Intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Interest rate % C. The U.S. Inflation rate is 6.2%, the ination rate in Blefuscu is twice that of the United States, the 1 year forward exchange rate + BLE25 2 = USD1. What is the current exchange rate between Blefuscu and the United States? (Do not round Intermediate calculations. Round your answer to 2 decimal places.) BLE Current exchange rate per dollar Problem 22-11 Exchange Rate Relationships (LO2) The following table shows interest rates and exchange rates for the US dollar and the Narnian leo. The spot exchange rate is 160 leos = $1 Complete the missing entries (Hint: Remember to convert the interest rate to a 1.013-month rate when appropriate.) (Do not round Intermediate calculations. Enter the Interest rates as a percent rounded to 2 decimal places. Round the forward leos to 2 decimal places Negative amounts should be indicated by a minus sign) 1 Year Dollar interest rate (annually compounded) Narnian interest rate (annually compounded) Forward leos per dollar 1 Month 8.3 % 10.9% 16.00 3 Months 90 % % 115% 17300 15.672

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