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Consider that the following information is available from…

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Consider that the following...

Consider that the following information is available from the capital market. The one-year interest rates are 3% in the United Sates and 1% in Europe. The current spot rate (ignoring the bid-offer spread) is $0.80 per euro. (a) Assume that Apple’s new i-phone currently sells in the US for $330.00 and the same product sells in Europe for €400.00. Further assume that the interest rates are used as proxies for the inflation rates for the two regions. Use the PPP framework to estimate the local prices of the i-phone in the next year. (5 marks) (b) Assume that you have US$ one million (or its Euro equivalent) to invest for a year and the 12-month forward rate is currently $0.805 per euro. Show how you can make risk-free profit via covered interest parity/arbitrage. (20 marks) (c) Based on (b), compare and contrast covered interest parity/arbitrage and uncovered interest parity/arbitrage.

Tutor's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

No, that is it. thank you

Submitted: 3 months ago.Category: Business and Finance Homework
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Answered in 14 hours by:
3/28/2018
Business Tutor: F. Naz, Bachelor's Degree replied 3 months ago
F. Naz
F. Naz, Bachelor's Degree
Category: Business and Finance Homework
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By what time do you need the answer, thanks.

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Customer reply replied 3 months ago
Ideally by tomorrow night please.
Also, please provide explanations for any mathematical workings done to answer the questions. Thanks
Business Tutor: F. Naz, Bachelor's Degree replied 3 months ago

Okay will try my best to answer in next 24 to 36 hours, take care.

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Business Tutor: F. Naz, Bachelor's Degree replied 3 months ago

How many hours from now are remaining in your final deadline as I live in another zone, thanks.

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Customer reply replied 3 months ago
The deadline is in 14 hours from now
Business Tutor: F. Naz, Bachelor's Degree replied 3 months ago

Sorry due to busy scehdule. will not be able to do in next 14 hours therefore opting out so other experts may help you, thanks.

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Customer reply replied 3 months ago
when should I expect to receive a reply to my original question? Please respond asap
Customer reply replied 3 months ago
Where is the answer to the question i have asked? EUR73.09 have been withdrawn from my account in 11 days yet no response has been received as yet. I demand a full refund as I have not been given the service I was promised and all communication has stopped from your end.
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