Suppose the Current Spot Rate Between the British Pound and the Canadian

question 149

Multiple Choice

Suppose the current spot rate between the British pound and the Canadian dollar is $\le$ 0.5810 per $1. Expected inflation in Britain is 8% and expected inflation in Canada is 5%. What is the expected exchange rate in one year from now if relative purchasing power parity holds?

• A) \(\le\)0.5636 \(\le\) per $1
• B) \(\le\)0.5984 \(\le\) per $1
• C) \(\le\)0.6120 \(\le\) per $1
• D) \(\le\)0.6187 \(\le\) per $1
• E) \(\le\)0.6340 \(\le\) per $1

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Corporate Governance

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