What happen to forward exchange rate-unexpected interest cut, Microeconomics

+44 141 628 6080
[email protected]

What happen to forward exchange rate-unexpected interest cut

Suppose the annual interest rate for a UK. money market instrument is 2% lower than the rate of a similar instrument in the U.S. If the forward exchange rate is 2.04 ($/£), according to the covered interest parity (CIP) condition,

a) What should be the spot exchange rate?

b) What may happen to the spot and forward exchange rate if there is an unexpected interest rate cut in the U.K.? Please explain how the equilibrium can be reestablished in the markets?

View Complete Question

Request for Solution File

Ask an Expert for Answer!!

Microeconomics: What happen to forward exchange rate-unexpected interest cut

Reference No:- TGS064961

Expected delivery within 24 Hours

Have a Question? (oR Write a Review)

Write atleast 100 words!!

Recent Questions Asked Microeconomics

Q : What is the journal entry to recognize this event

A $6,000, 60-day, 12% note recorded on November 21 is not paid by the maker at maturity. what is the journal entry to recognize this event ?

Q : Straight-line production possibilities curves

A basic assumption for comparing the straight-line production possibilities curves for two nations is that the production possibilities curves reflect?

Q : Engagement to audit financial statements

On August 13, a CPA completed field work on an engagement to audit financial statements for the year ended June 30. On August 27, an event came to the CPA's attention that should be disclosed in the notes to the financial statements.

Q : Discuss the difference between the two sentences

For the following pair of sentences below, discuss the difference between the two sentences referring to notions such as phrasal categories and functions.

Q : What happen to forward exchange rate-unexpected interest cut

What may happen to the spot and forward exchange rate if there is an unexpected interest rate cut in the U.K.? Please explain how the equilibrium can be reestablished in the markets?

Q : She was saying due to her poor english

I took a math class where the professor was from a foreign country and whenever she spoke it was very hard to understand her dialect. I literally could not make out what she was saying due to her poor English

Q : What is the ratio of cash to monthly cash expenses

During 2009, Tempo Inc has monthly cash expenses of $120,000. On December 31, 2009, their cash balance is $1,860,000. what is the ratio of cash to monthly cash expenses ?

Q : Favorable direct materials price variance

Which of the following are possible causes of a favorable direct materials price variance?

Q : Who will light incense when mother''s gone

whats element does langston hughes and andrew lam share in "salvation" and " who will light incense when mother's gone?"

1933703

Questions
Asked

3,689

Active Tutors

1453028

Questions
Answered

Start Excelling in your courses, Ask a tutor for help and get answers for your problems !!

ask Question

Request for Solution File

Ask an Expert for Answer!!

Microeconomics: What happen to forward exchange rate-unexpected interest cut

Reference No:- TGS064961

Have a Question? (oR Write a Review)

Recent Questions Asked Microeconomics

Q : What is the journal entry to recognize this event

Q : Straight-line production possibilities curves

Q : Engagement to audit financial statements

Q : Discuss the difference between the two sentences

Q : What happen to forward exchange rate-unexpected interest cut

Q : She was saying due to her poor english

Q : What is the ratio of cash to monthly cash expenses

Q : Favorable direct materials price variance

Q : Who will light incense when mother''s gone

Why consciousness is an especially important

How you ensure that other team members understand roles

Searching for articles relating to young people

What helps to be more professional

What options is true in relation to validity

Compare independent variables, dependent variables

How does instagram shape the ways we see our bodies

Request for Solution File

Ask an Expert for Answer!!

Microeconomics: What happen to forward exchange rate-unexpected interest cut

Reference No:- TGS064961

Recent Questions Asked Microeconomics

Q : What is the journal entry to recognize this event

Q : Straight-line production possibilities curves

Q : Engagement to audit financial statements

Q : Discuss the difference between the two sentences

Q : What happen to forward exchange rate-unexpected interest cut

Q : She was saying due to her poor english

Q : What is the ratio of cash to monthly cash expenses

Q : Favorable direct materials price variance

Q : Who will light incense when mother''s gone

Asked Questions