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The price of pound is $1.248/. Both the UK and the US have inflation of...

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Finance

  1. The price of pound is $1.248/. Both the UK and the US have inflation of 1.46%. Assuming the Purchasing Power Parity holds, if inflation in US increases to 2.2%, what would be the new price of pound?
  2. If the interest rate in the Eurozone is 0.06%, the interest rate in the US is 0.85%, the spot exchange rate is $1.068/, and the interest rate parity holds, what is the one-year forward exchange rate?

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