QUESTION 3 The interest rate in the Sri Lanka is 12.5%. The interest rate in...
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QUESTION 3 The interest rate in the Sri Lanka is 12.5%. The interest rate in the Australia is 1.5%. The spot rate for the Sri Lankan Rupee is A$0.0082. According to the international Fisher effect (IFE), the Sri Lankan Rupee should adjust to a new level of: A. A$0.0074. B. A$0.0083. O C. A$0.0092. D. A$0.0091. O E. A$0.0082. Assume the following bid and ask rates of the pound for two banks as shown below: Bid Ask Sampath Bank in Sri Lanka Rs. 120.15 Rs. 121.42 ANZ in Australia Rs. 118.50||Rs. 120.25 What is the arbitrage profit per Australian dollar
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