3. In July the one-year interest rate is 4% on Swiss francs and 13% on...
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3. In July the one-year interest rate is 4% on Swiss francs and 13% on United States dollars
a. If the current exchange rate is $.63/SF, what is the expected future exchange rate in one year?
b. Suppose a change in expectations regarding future U.S. inflation causes the expected future spot rate to rise to $.70/SF. What should happen to the U.S. interest rate?
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