What is the new equilibrium dollar and franc exchange rate

Assignment Help Business Economics

Reference no: EM131163796

Suppose that the US dollar interest rate and the Swiss Franc interest rate are the same, 5 percent per year, but that there is a risk premium of 1 percent associated with holding Swiss Franc rather than US dollars over the year. Now suppose that the expected future exchange rate, $1.12 US per franc, remains constant as Swiss's interest rate rises to 10 percent per year. (c) If the US interest rate also remains constant, what is the new equilibrium dollar/franc exchange rate?

Reference no: EM131163796

Questions Cloud

Determined from an individuals demand curve for good : Which of the following may be determined from an individuals demand curve for a good?

Find all the foods with that minimum price : Find the price of the least expensive food in the L_foods table. Find all the foods with that minimum price.

Determine the main functions of the practice : Determine the main functions of the practice that will need to remain operational before, during, and / or after a natural disaster or public health emergency

What factors explain wage differentials : What factors explain wage differentials? why do movie stars get paid much more than school teachers? The answer must be explain the concepts as if your explaining it to a person who have no knownlege with the subject.

What is the new equilibrium dollar and franc exchange rate : Suppose that the US dollar interest rate and the Swiss Franc interest rate are the same, 5 percent per year, but that there is a risk premium of 1 percent associated with holding Swiss Franc rather than US dollars over the year. Now suppose that the ..

Explain which is the most likely diagnosis for the patient : Include an explanation of unique characteristics of the disorder you identified as the primary diagnosis. Then, explain a treatment and management plan for the patient, including appropriate dosages for any recommended treatments.

At what angular velocity is the maximum power delivered : At what angular velocity is the maximum power delivered? How would your analysis differ if there were many, many buckets on the wheel, so that the jet was continually striking at least one bucket?

Explain the difference between fixed-floating exchange rates : Explain the difference between fixed and floating exchange rates. The answer must be explain the concepts as if your explaining it to a person who have no knownlege with the subject.

Binary search tree considering all possible cases : Write an algorithm that deletes a node from a binary search tree considering all possible cases. Analyze your algorithm and show the results using order notation.

User Account

All Pages