Assume That Inflation in the United States Is Expected to Be

question 24

True/False

Assume that inflation in the United States is expected to be 9 percent, while inflation in Australia is expected to be 5 percent over the next year. Today you receive an offer to purchase a one-year put option for $.03 per unit on Australian dollars at a strike price of $0.72. Today the Australian dollar is quoted at $0.70. You believe that purchasing power parity holds. You should accept the offer.

---

Definitions:

Propositions

Statements or assertions that express a judgement or opinion, which can be either true or false.

Propositions

Statements that can be either true or false, serving as the basic blocks of arguments in logic.

Equivalent

Having equal value, function, or meaning in a given context.

Populous

Characterized by having a large population.