1) Relationships among Inflation, Interest Rates, and Exchange Rates
a) Give a summary of purchasing power parity (PPP), interest rate parity (IRP), and international Fisher effect (IFE).
b) By using historical data or literature review, carry out research on relative effectiveness of above theories in describing movements in values of main currencies such as US dollar, pound Sterling, and Japanese yen over recent two decades.
c) Discover relative validity of above theories in determination of exchange rates in Jordan during recent two decades.
d) How can MNCs use PPP, IRP, and IFE theories in forecasting or estimation of their future cash flows? Give suitable example about a particular MNC or the fictitious company in your discussion.
Requirements
Min Pages: 8
Max Pages: 10