Estimate the expected inflation rate in united states


A U. S. Company can borrow 10,000 pound in Great Britain for 6% interest, paying back 10,600 pounds in one year. Alternatively, the U.S. Company can borrow an equivalent amount of U.S. Dollars in the United States and pay 13% interest. Assuming the capital markets are efficient, estimate the expected inflation rate in the United States if inflation in Great Britain is expected to be zero.

Request for Solution File

Ask an Expert for Answer!!
Finance Basics: Estimate the expected inflation rate in united states
Reference No:- TGS054372

Expected delivery within 24 Hours