Schweser book: Practice Exams: Exam #3 Afternoon, Question #109 Anyone know how you get the real spot rate from this question? Thanks,
Q109 on Exam 3PM is about Ethics. Could you clarify please?
Sweet
I’m sorry about that. Exam 2: Afternoon, Question 109.
Spot rate times the consumption basket prices. ie Basket of goods in SF costs 150 SF Basket of goods in USD costs 300 USD Spot rate = $2/SF 2/SF x (150 SF/ 300) = $1/SF real rate
real spot=spot x (Pfc/Pdc) p=price level edit: take note spot is dc/fc, so the numerator rule doesn’t apply here (if you use schweser’s method)
Good stuff. I was trying to use the intrest rates and inflation rates, ie. Fisher Equation and it was not equaling out, so i knew some thing was up.
What about question #118. Does the answer seem right?
is the real exchange rate supposed to be 1 in the long-term? or do the units not matter? i was never sure how we’re quote the price levels?