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Questions 35-39 are based on the following information: In October 2013, there is a consensus in the capital market that the annual inflation rate is likely to be 3.5% in US and -1.5% in China for the next two years. Based on this information, answer the following questions regarding your prediction on the foreign exchange rate. You would expect [l1] (US or China?) to have a higher interest rate according to parity relations. (2 points)

Questions 35-39 are based on the following information: In October 2013, there is a consensus in the capital market that the annual inflation rate is likely to be 3.5% in US and -1.5% in China for the next two years. The spot exchange rate in October 2013 is CNY6.10/$. Based on this information, answer the following questions regarding your prediction on the foreign exchange rate. Using the exact version of parity relationships, the forward rate in October 2015 (two years from 2013) is CNY [l1] /$. (Please use indirect quote and leave 2 decimal points) (2 points)

Questions 26-30 are based on the following information: Assume the current spot Euro is $1.1/€ and the six-month European put option has a striking price of $1.15/€. Assume the option premium is $0.02/€. What is the net profit/loss of the seller/writer of the option when the value of Euro is $1.12/€ at the maturity date?

The TD 5/5 (3/3 organ) for the Brain is:

Most exchange traded currency futures contracts on CME

Questions 35-39 are based on the following information: In October 2013, there is a consensus in the capital market that the annual inflation rate is likely to be 3.5% in US and -1.5% in China for the next two years. Based on this information, answer the following questions regarding your prediction on foreign exchange rate. Chinese Yuan will be selling at a forward [l1] (premium/discount). The size of the forward premium/discount is [l2] %. Use approximate version of parity relationships. (2 points)

Although IRP tends to hold, it may not hold precisely all the time

The TD 5/5 (3/3 organ) for the eye lens is:

If you think that the euro is going to appreciate against the dollar

Yesterday, you entered into a futures contract to buy €62,500 at $1.20 per €. Your initial performance bond is $1,500 and your maintenance level is $500. At what settle price will you get a demand for additional funds to be posted?