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Question 29 (0.8 points) If the interest rate on euro-denominated assets is 13 percent and it...

Question:


Question 29 (0.8 points) If the interest rate on euro-denominated assets is 13 percent and it is 15 percent on peso-denominat
Question 29 (0.8 points) If the interest rate on euro-denominated assets is 13 percent and it is 15 percent on peso-denominated assets, and if the euro is expected to appreciate at a 4 percent rate against peso, for Francois the Frenchman the expected rate of return on peso- denominated assets is %.

Answers

11 percent.

This is a situation of interest parity condition. It is defined as a condition in which the rate of returns on assets which are comparable for two different countries are equal.

.

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