Percentage Change = (0.44 - 0.40)/0.40 = 10% 24. What will the dollar price of the Swiss franc be in one year?
A. $0.4044
B. $0.5044
C. $0.6015
D. $0.7055
* E. $0.4078
Solution: Use Equation (8-3):
Predicted Rate = $0.4 x [(1 + 0.05)/(1 + 0.03)]
= $0.4078 25. What is the real depreciation (-) or real appreciation of the Swiss franc during the year?
A. 6.4%
B. 7.1%
* C. 7.9*
D. 8.6%
E. 9.9%
Solution: (0.4400 - 0.4078)/0.4078 = 7.9%
26. The spot rate is US$0.50 per Australian dollar. The annual interest rates are 12 percent for the United States and 8 percent for Australia. If these interest rates remain constant, then what is the US dollar market forecast of the spot rate for the Australian dollar in five years?
