PLEASE SHOW WORK! I have no idea how to get these answers. Use the following inf

ID: 2689179 • Letter: P

Question

PLEASE SHOW WORK! I have no idea how to get these answers.

Use the following information for questions 11-14

Current Exchange Rates: $1.25 = 1 Euro and.625 Pounds = $1 Current one-year Inflation Rates: 6% in England, 2% in Europe, and 4% in the US

11. What is the exchange rate for Dollars per Pound? ANSWER IS E 1.6 DOLLARS PER POUND

a) .5 dollars per pound b) .781 dollars per pound c) .8 dollars per pound d) 1.28 dollars per pound e) 1.6 dollars per pound

12. What should the cross rate be between Euros and Pounds? ANSWER IS D 1.28 EUROS PER POUND

a) .5 pounds per euro b) .781 euros per pound c) .92 pounds per euro d) 1.28 euros per pound e) 2 euros per pound

13. If interest parity holds true, what is the expected exchange rate between euros and dollars one year from now? ANSWER IS B .7846 EUROS PER DOLLAR

a) .637 Dollars per Euro b) .7846 Euros per dollar c) 1.2317 Dollars per Euro d) 1.2745 Euros per Dollar e) 1.57 Dollars per Euro

14. The Euro is expected to __________ against the Dollar and ____________against the Pound.

ANSWER IS A APPRECIATE, APPRECIATE

a) Appreciate, Appreciate b) Appreciate, Depreciate c) Depreciate, Depreciate d) Depreciate, Appreciate

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1 British Pound Sterling equals 1.6046 US Dollar

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