Calculate the Expected Exchange Rate in One Year's Time If

question 36

Multiple Choice

Calculate the expected exchange rate in one year's time if the present exchange rate is AUD 1 = JPY 80 and if the expected inflation rates in Australia and Japan are 2 per cent and 8 per cent,respectively.

• A)AUD 1 = JPY 82.50
• B)JPY 1 = AUD 0.0132
• C)AUD 1 = JPY 78.20
• D)JPY 1 = AUD 0.0118

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Definitions:

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