the uncovered interest parity holds and people are risk-neutral. A Chinese deposit pays 5%, the spot direct exchange rate in the US is 0.14, and the expected direct rate is 0.145. How much does the US deposit pay?

the uncovered interest parity holds and people are risk-neutral. A Chinese deposit pays 5%, the spot direct exchange rate in the US is 0.14, and the expected direct rate is 0.145. How much does the US deposit pay?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter11: Foreign Exchange, Trade, And Bubbles

Section: Chapter Questions

Problem 2MC

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