Let the Expected Inflation in the United Sates Be 4

question 56

Multiple Choice

Let the expected inflation in the United Sates be 4% and the expected inflation in Brazil is 7.3 %; Also suppose that the United States one-year,risk-free rate is 5% what must the risk-free rate in Brazil be to maintain interest rate parity?

• A) 12.30%
• B) 7.67%
• C) 5.37%
• D) 8.33%

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