Inflation Forecast
Not what you're looking for?
Please help with the following problem regarding international finance. Provide step by step calculations in the solution.
On August 1st 2009, the USD/SAR exchange rate was SAR9.20 per USD. On August 1st 2010 (1 year later), the USD/SAR rate moved up to USD/SAR9.80. During this period, one year nominal risk free interest rate in the US was 3.5% per annum (per year). The real interest rate in the US was 1.5%. On August 1st, 2010, economists shared the consensus view that the USD/SAR rate was at Purchasing Power Parity equilibrium. Provided that IFE holds, what would be the best forecast of South African inflation between August 2009 and 2010?
A. 8.62
B. 2.90
C. 8.06
D. 10.25
Purchase this Solution
Solution Summary
This in-depth solution explains the computation of inflation forecast with step-by-step explanations and workings shown.
Solution Preview
Problem:
On August 1st 2009, the USD/SAR exchange rate was SAR9.20 per USD. On August 1st 2010 (1 year later), the USD/SAR rate moved up to USD/SAR9.80. During this period, one year nominal risk free interest rate in the US was 3.5% per annum (per year). The real interest rate in the US was 1.5%. On August ...
Education
- MPhil, Madurai Kamaraj University
- MCom, Annamalai University
- IATA, International Air Transport Association
Recent Feedback
- "Great explanations on how the answers were obtained."
- "Love the way she explains everything step by step."
- "Solutions were thoroughly explained."
- "Excellent explanations of how problems are solved"
- "Thanks"
Purchase this Solution
Free BrainMass Quizzes
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media
Motivation
This tests some key elements of major motivation theories.
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.