--%>
Assignment Help - homework help

Question based on Fisher effect

The Fisher effect recommends that nominal interest rates differ among countries due to differences in the respective rates of inflation.  According to the Fisher effect and your assessment of the long-term & short-term Eurocurrency interest rates presented, order the five countries from highest to lowest in terms of the size of the inflation premium imbedded in the nominal interest rates for year 1998.

According to the Fisher effect, the short-term and the long-term both interest rates recommend that the inflation premiums for the four countries (or zone) ordered through highest to lowest are: Great Britain, the Euro-zone, the United States and Japan.

   Related Questions in Financial Management

  • Q : Question on French stock investment Mr.

    Mr. James K. Silber, an avid international investor, sold a share of Rhone-Poulenc only, a French firm, for FF42. The share was bought for FF42 year ago. The exchange rate is FF6.15 per U.S. dollar and was FF6.65 per dollar a year ago. Mr. Silber acquired FF4

    		•
  • Q : Investing in the United States relative

    At the beginning of the year of 1996, the yearly interest rate was 6 percent in the United States and 2.8 percent in Japan. At the time the exchange rate was 95 yen per dollar. Mr. Jorus, the manager of a Bermuda-based hedge fund, thought that the substantial

    		•
  • Q : Callable bond and a putable bond What

    What are a callable bond and a putable bond?  How can each of these bonds affect their market interest rates?

    		•
  • Q : Explain static arbitrage and

    Illustrates a case of a static arbitrage and model-independent arbitrage?

    		•
  • Q : Explain the concept of the risk–return

    Explain the concept of the risk–return relationship.

    		•
  • Q : Eurodollar futures contracts based

    Illustrate how the bank can employ a position alternatively in Eurodollar futures contracts to hedge the interest rate risk formed by the maturity mismatch it has with the $3,000,000 six-month Eurodollar deposit & rollover Eurocredit position indexed to th

    		•
  • Q : Assessing payment method Whereas you

    Whereas you were visiting London, you purchased a Jaguar for £35,000, payable in three months. You have sufficient cash at your bank in New York City that pays 0.35% interest per month, compounding monthly, to pay for the car. At present, the spot exchan

    		•
  • Q : Explain the important properties of

    Explain the important properties of Brownian motion.

    		•
  • Q : Explain simple and complicated formula

    Explain the difference between simple and complicated formula of value at risk.

    		•
  • Q : Which numerical method should use for

    You need to price a European, non-path-dependent contract upon a basket of equities. Which numerical method should you use?

    		•