Foreign interest rate is 4 percent per year.
<br/> – Foreign interest rate is 4 percent per year. Home interest
rate is 3 percent per year. If a year from now exchange rate is expected to be 10 (units of home currency per unit of foreign currency), what is the exchange rate today, assuming the UIP holds? Show your calculations.
-If home interest rate rises to 5 percent, what will the current exchange rate have to be for UIP to hold?
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