The nominal interest rate in the u s is 7 and the nominal, Ask an Expert

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The nominal interest rate in the U. S. is 7% and the nominal interest rate in U. K. is 4%. If the real interest rate parity held we can conclude that:

a the expected inflation rate in the U. S. is less than the same in U.K.

b the exchange rate in terms of dollars per pound is expected to rise.

c the expected inflation rate in U. K. is less than the same in the U. S.

d arbitrage profits can be earned by borrowing in dollars and investing in pounds.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92352151

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