To capitalize on high foreign interest rates using covered interest arbitrage, a U.S. investor would convert dollars to the foreign currency, invest in the foreign country, and simultaneously sell the foreign currency forward.

Because there are a variety of factors in addition to inflation that affect exchange rates, this will:

Assume that the U.S. one-year interest rate is 3% and the one-year interest rate on Australian dollars is 6%. The U.S. expected annual inflation is 5%, while the Australian inflation is expected to be 7%. You have $100,000 to invest for one year and you believe that PPP holds. The spot exchange rate of an Australian dollar is $0.689. What will be the expected yield on your investment if you invest in the Australian market? 

When using ____, funds are not tied up for any length of time. (Select all that apply.)

The current account balance includes: (Select all that apply.)

Information about the location, size, and kind of windows and doors to be installed in the building are found on the ____.

Assume that the one-year interest rate in the U.S. is 7% and in the U.K. is 5%. According to the international Fisher effect, British pound’s spot exchange rate should ____ by about ____ over the year.

As the real value of the dollar rises, the current account balance is likely to ________ and the capital/financial account balance will ________.

What kind of protagonist is Faustus?

The interest rate on euros is 8%. The interest rate in the U.S. is 5%. The euro’s forward rate should exhibit a premium of about 3%.