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1) The FX dealer has two quotes
1) The FX dealer has two quotes. The exchange rate between Sri Lankan Rupee and the Australian dollar is Rs.120 / A$. The exchange rate between Myanmar Kyat and the Australian dollar is MMK895 / A$. Assume that the Australian dollar is the home currency. What is the exchange rate between the two foreign currencies?
|
A. |
Rs. 7.458 / MMK. |
|
|
B. |
Rs. 7.845 / MMK. |
|
|
C. |
Rs. 0.134 / MMK. |
|
|
D. |
Rs. 0.127 / MMK. |
|
|
E. |
none of the above. |
2) The interest rate in the Sri Lanka is 12.5%. The interest rate in the Australia is 1.5%. The spot rate for the Sri Lankan Rupee is A$0.0082. According to the international Fisher effect (IFE), the Sri Lankan Rupee should adjust to a new level of:
|
A. |
A$0.0074. |
|
|
B. |
A$0.0083. |
|
|
C. |
A$0.0092. |
|
|
D. |
A$0.0091. |
|
|
E. |
A$0.0082. |
Expert Solution
PFA
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