Trans-Atlantic Quotes. Separated by more than 3,000 nautical miles and five time zones, money and...
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Trans-Atlantic Quotes. Separated by more than 3,000 nautical miles and five time zones, money and foreign exchange markets in both London and New York are very efficient. The following information has been collected from the respective areas: London New York 1.3263 1.3263 Spot exchange rate ($/) 1-year Treasury bill rate Expected inflation rate 3.897 % 4.496 % Unknown 1.245 % a. What do the financial markets suggest for inflation in Europe next year? b. Estimate today's 1-year forward exchange rate between the dollar and the euro. a. What do the financial markets suggest for inflation in Europe next year? The rate the financial markets suggest for inflation in Europe next year is %. (Round to three decimal places.) b. Estimate today's 1-year forward exchange rate between the dollar and the euro. The estimate for today's 1-year forward exchange rate between the dollar and the euro is $ 1. (Round to four decimal places.)
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