Purchase Solution

Expected Spot Rate

Not what you're looking for?

Ask Custom Question

My question is if the US expects to raise prices by 3% within the next year and in Switzerland prices may rise 7% at the same time, what is the expected spot rate in one year of the Swiss franc given that the current spot exchange rate is $0.168?

Purchase this Solution
Solution Summary

This solution is comprised of a detailed explanation of how to compute the expected spot rate in one year of the Swiss franc given that the current spot exchange rate is $0.168.

Solution Preview

Spot Rate
My question is if the US expects to raise prices by 3% within the next year and in Switzerland prices may rise 7% at ...

Purchase this Solution
Free BrainMass Quizzes
Operations Management

This quiz tests a student's knowledge about Operations Management

Academic Reading and Writing: Critical Thinking

Importance of Critical Thinking

Managing the Older Worker

This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce

Understanding Management

This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.

Basic Social Media Concepts

The quiz will test your knowledge on basic social media concepts.

View More Free Quizzes
Related BrainMass Solutions

  • Using PPP/IFE to Determine Exchange Rates

    Expected Spot rate / Current Spot rate = (1+ US interest rate) / (1+ SA interest rate) Or Expected Spot rate / $ 0.158 = (1+ 10%) / (1+ 8%) Or Expected Spot rate = $ 0.158 x (1+ 10%) / (1+ 8%) = $0.161 Answer: $0.161 c.

  • International Fisher Effect

    Expected Spot rate / Current Spot rate = (1+ US interest rate)/ (1+ Swedish interest rate) or Expected Spot rate= Current Spot rate x{ (1+ US interest rate)/ (1+ Swedish interest rate)} or Expected Spot rate= $ 0.1286 x{ (1+ 5%)/ (1+ 7%)}

  • Purchasing Power Parity

    Purchasing Power Parity condition Forward rate ( or expected spot rate in 1 yr) / Current Spot rate = ( 1+ US inflation)/ (1+ French inflation) Or Forward rate= Spot rate x { ( 1+ US inflation)/ (1+ French inflation)} Spot rate= $0.1680

  • International Finance

    The inflation rate in Great Britain is expected to be 4% per year, and the inflation rate in Switzerland is expected to be 6% per year. If the current spot rate is £1 = SF 12.50, what is the expected spot rate in two years? 10.

  • International Financial Management

    According to PPP, what is the expected spot rate of the euro in one year?

  • expected spot rate in one year between Euro and USD

    104253 Expected spot rate One year interest rates are currently 3.30% in the U.S and 2.60% in "Euroland. The current spot rate between the euro and dollar is 1.3225/.

  • INTERNATIONAL FINANCE

    RATE US $0.168. the expected spot rate is ESR(FR/US) = Current spot rate * (1+Inflation of France)/ (1+Inflation of US) = 0.168*(1+7%)/(1+3%)= $0.175

  • Forward rate, Appreciation/ Depreciation of currency

    This does not imply that the forward rate is an accurate estimate of the spot rate in the future, just that the future spot rate is equally likely to be higher or lower than the forward rate. 2.

  • Interest rate parity and Purchasing power parity

    Spot rate 1 year from now / Spot rate =(1+ US inflation)/ (1+ Mexican inflation) or Expected Spot rate / $0.10 =(1+ 7%)/ (1+ 3%) Or Expected Spot rate = $0.1039 For 20,000,000 Mexican pesos, expected amount

View More Related Solutions