Question

The expected annual inflation rate in Australia has dropped all the way to 0%. However, the...

The expected annual inflation rate in Australia has dropped all the way to 0%. However, the expected annual inflation rate in Thailand has risen to 12.5%. The current exchange rate for the Thai Baht is A$0.049. After supply and demand for the Thai Baht has adjusted according to purchasing power parity, the new exchange rate for the Baht will be A. A$0.043. B. A$0.044. C. A$0.055. D. A$0.057. E. A$0.125.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1


EXPECTED FUTURE SOPT RATE =

1Thai bath= A$ 0.044.

Answer : option (B) A$ 0.044.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
The annual inflation rate in the US is expected to be 6%, while it is expected...
The annual inflation rate in the US is expected to be 6%, while it is expected to be 2.5% in Australia. The current spot rate(on 10/07/18) for the Australian Dollar (AD) is $0.85. Required i) According to Purchasing Power Parity, estimate the expected percenatage change in the value of the AD during a one-year period and calculate its AD expected values at 10/07/19. ii) Suppose the value of the AD turned out to be $0.865 on 10/07/18, what is the...
The current spot rate between the euro and dollar is €1.0957/$. The annual inflation rate in...
The current spot rate between the euro and dollar is €1.0957/$. The annual inflation rate in the U.S is expected to be 2.98 percent and the annual inflation rate in euroland is expected to be 2.43 percent. Assuming relative purchasing power parity holds, what will the exchange rate be in two years?
The inflation rate in the U.S. is 2%, while the inflation rate in Japan is 10%....
The inflation rate in the U.S. is 2%, while the inflation rate in Japan is 10%. The current exchange rate for the Japanese yen (¥) is $0.0092. After supply and demand for the Japanese yen has adjusted in the manner suggested by purchasing power parity, the new exchange rate for the yen will be: (Points : 3.5)        $0.0099.        $0.0085.        $0.0082.        $0.0096.
East Asiatic Company—Thailand. The East Asiatic Company​ (EAC), a Danish company with subsidiaries throughout​ Asia, has...
East Asiatic Company—Thailand. The East Asiatic Company​ (EAC), a Danish company with subsidiaries throughout​ Asia, has been funding its Bangkok subsidiary primarily with U.S. dollar debt because of the cost and availability of dollar capital as opposed to Thai​ baht-denominated (B) debt. The treasurer of​ EAC-Thailand is considering a​ 1-year bank loan for $252,000. The current spot rate is B32.06​/$, and the​ dollar-based interest is 6.72​% for the​ 1-year period. ​ 1-year loans are 11.98​% in baht. a. Assuming expected...
24. Assume the spot exchange rate is £.6229. The expected inflation rate in the U.K. is...
24. Assume the spot exchange rate is £.6229. The expected inflation rate in the U.K. is 3.8 percent and in the U.S. it is 2.9 percent. What is the expected exchange rate three years from now if relative purchasing power parity exists? £.5391 £.6062 £.6399 £.6285 £.6233
1. Suppose the expected annual rate of inflation for the coming year is 8% for the...
1. Suppose the expected annual rate of inflation for the coming year is 8% for the US and 4% for Switzerland. The current spot exchange rate is $:SFr=2. The one-year interest rate is 10% in the US. Using the precise form of the international parity relations, compute the one-year interest rate in Switzerland, the expected Swiss franc to pound exchange rate in one year, and the one-year forward exchange rate. 2. A US investor likes to invest in the foreign...
Since Ben Holt, Blades’ chief financial officer (CFO), believes the growth potential for the roller blade...
Since Ben Holt, Blades’ chief financial officer (CFO), believes the growth potential for the roller blade market in Thailand is very high, he, together with Blades’ board of directors, has decided to invest in Thailand. The investment would involve establishing a subsidiary in Bangkok consisting of a manufacturing plant to produce Speedos, Blades’ high-quality roller blades. Holt believes that economic conditions in Thailand will be relatively strong in 10 years, when he expects to sell the subsidiary. Blades will continue...
A 1 year Treasury Security has a yield of 8%. The investor's expected annual rate of...
A 1 year Treasury Security has a yield of 8%. The investor's expected annual rate of inflation is 4%. However, the actual annual rate of inflation was 3%. 1. What is the expected real rate of interest? 2. What is the actual realized rate of interest?
A 1 year Treasury Security has a yield of 8%. The investor's expected annual rate of...
A 1 year Treasury Security has a yield of 8%. The investor's expected annual rate of inflation is 4%. However, the actual annual rate of inflation was 3%. 1. What is the expected real rate of interest? 2. What is the actual realized rate of interest?
Background: Australian Dyes Pty Ltd manufactures high quality dyes for textiles and exports to Europe. The...
Background: Australian Dyes Pty Ltd manufactures high quality dyes for textiles and exports to Europe. The Indonesian government has invited Australian Dyes to open a manufacturing plant in Indonesia so imported dyes can be replaced by local production. If Australian Dyes makes the investment it will operate the plant for five years and then be required to sell the business as a going concern to Indonesian investors at the end of the fifth year. Australian Dyes believes a multiple of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT