Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Effect on Exchange Rates
As we know, one of the most vital determinants of changes in relative exchange rates is the relative inflation rate. Assuming a free and open market, it is expected that an inflationary currency will depreciate against the currency having relatively stable inflation rate and the amount of depreciation will approximately equal the difference in inflation rates. The Purchasing Power Parity (PPP) theory says that spot exchange rates can shift to adjust perfectly to inflation differentials. The empirical evidence suggests that PPP gives improper reasoning for the fluctuations in the short-term exchange rate movements. In 1983, Adler and Dumas[6] discovered that concomitant inflation differentials revealed less than 5% of monthly exchange rate movements recorded in the 1970s. Although the short-term movements in exchange rates were not closely attached to the relative inflation shift, several researchers predicted that this relationship can be applicable to the longer period.
The non-existence of a strong short-term relationship can be related to the difficulty faced in calculating inflation rate and the relatively slow speed of adjustment for the change in the inflation rate observed in the goods markets. It is also possible that a foreign exchange rate, instead of adjusting exclusively on concurrent inflation rates also reflects the expected inflation rates. This suggests that current exchange rates are more affected by future expectations rather than the historical inflation rates.
Q. Show the Accountable Plan? Accountable Plan - An accountable plan is any reimbursement or other expense allowancearrangement of an employer which meets all of the subseque
What are the Components of Return Return is fundamentally made up of two components: Periodic cash receipts or income on the investment in the form of interest,
Determine Current ratio or working capital ratio CA = Current assets/Current liabilities (times) Current ratio measures the short term solvency or liquidity; it demonstra
critically appraise baumol max. theory as an alternative objective of the firm
Liquidity risk tends to change as and when there exists a change in the spread between the bid and the ask price. Market liquidity change is a matter of concern f
Provide an argument for including or not current liabilities in the cost of capital calculation.
Explain the concept of the world beta of a security. Answer: The world beta calculates the sensitivity of returns to a security to returns to the world market portfolio. It is
what type of financing is appropriate to each fim
Determine the factors of financial risk by giving example W. T. L. Company's cost of long-term debt two years ago was 8 percent. This 8 percent was found to represent a 4- per
Q. Future Value of a Series of Equal Cash Flows? Quite often a decision may result in the occurrence of cash flows of the same amount every year for a number of years consecuti
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd