EBK CORPORATE FINANCE
EBK CORPORATE FINANCE
11th Edition
ISBN: 8220102798878
Author: Ross
Publisher: YUZU
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Chapter 31, Problem 13QP
Summary Introduction

To explain: Exchange rate for year 1, 2 and 5 for Country H and Country U.

Exchange Rate:

Exchange rate is used to define the value of one currency against the other currency. Exchange rate has two main components one is the currency used to compare that is domestic currency and other is the currency used to compare against that is foreign currency.

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Students have asked these similar questions
) Suppose the spot exchange rate for the Hungarian Forint is HUF 209/USD. The infiation rate in the US is 3.5% per year and 5.7% in Hungary. What do you predict the exchange rate will be in two-years? _What is the-expected appreciation or depreciation of the USD over this period?
Suppose the current exchange rate for the Polish zloty is Z3.3. The expected exchange rate in 5 years. The expected exchange rate in 5 years is Z3.56. What is the difference in the annual inflation rates for the United States and Poland over this period? Assume that the anticipated rate is constant for both countries.
Suppose that the annualized inflation in the US is 3% while annual inflation in Europe is 1%. If the current exchange rate is $1.40 per Euro that would you expect the exchange rate to be in one year? If the exchange rate one year from now turns out to be $1.50 per Euro, what has happened to the real exchange rate?

Chapter 31 Solutions

EBK CORPORATE FINANCE

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