tailieunhanh - Lecture Multinational financial management - Topic 7: Interest rate parity

Lecture Multinational financial management - Topic 7: Interest rate parity. In this chapter, tudents can forecast exchange rates and expected appreciations using interest rate parity and unbiased forward rate. | Topic #7: Interest rate paritY L. Gattis The Pennsylvania State University 1 Finance 407: Multinational Financial Management Review: No Calculator Estimate 2 Annual inflation in the . and Japan is 5% and 1%. The spot price of the Yen is ¥$. What is the expected spot price in 3 months? 104 103 101 99 96 Review: No Calculator Estimate 3 The euro is expected to devalue by 2% against the British pound in one year. British inflation is forecasted to be 5%. What is euro area inflation according to PPP? 7% 5% 3% 1% Review: No Calculator 4 An Ipad costs $699 in the . and ¥6,999 in China. The spot price of the yuan is ¥$. Is the yuan undervalued or overvalued according to PPP? Undervalued Overvalued Learning Objectives 5 Learning Objectives Students can forecast exchange rates and expected appreciations using interest rate parity and unbiased forward rate. Relative PPP and Interest Rate Parity 6 Relative PPP allows for differences in absolute prices, but changes in prices . | Topic #7: Interest rate paritY L. Gattis The Pennsylvania State University 1 Finance 407: Multinational Financial Management Review: No Calculator Estimate 2 Annual inflation in the . and Japan is 5% and 1%. The spot price of the Yen is ¥$. What is the expected spot price in 3 months? 104 103 101 99 96 Review: No Calculator Estimate 3 The euro is expected to devalue by 2% against the British pound in one year. British inflation is forecasted to be 5%. What is euro area inflation according to PPP? 7% 5% 3% 1% Review: No Calculator 4 An Ipad costs $699 in the . and ¥6,999 in China. The spot price of the yuan is ¥$. Is the yuan undervalued or overvalued according to PPP? Undervalued Overvalued Learning Objectives 5 Learning Objectives Students can forecast exchange rates and expected appreciations using interest rate parity and unbiased forward rate. Relative PPP and Interest Rate Parity 6 Relative PPP allows for differences in absolute prices, but changes in prices will affect future exchange rates If you assume differences in international interest rates reflect only differences in inflation, then changes in interest rates will also affect exchange rates. Assumes real interest rates and risk premiums are the same in both countries You could also flip all the h’s and f’s to get indirect quote IRP Caveats 7 Nominal Rate ≈ Real Rate + Inflation+ Default Risk Premium + Liquidity Risk Premium Differences in nominal rates may reflect differences in Inflation Liquidity Risk Credit Risk It is most appropriate to apply IRP to two currencies with similar credit risk and liquidity. Euro IRP for the EURUSD generally use yields on German bonds because of similar credit and liquidity risk of . bonds. Forecasting Using PPP or IRP for more or less than one year 8 For forecasting Interest Rates for t years For forecasting exchange rates exchange rates for less than one year – n months, where r or i is still annualized Poll The spot price of the euro is $. .

• Tài chính doanh nghiệp
• Financial management
• Multinational financial management
• Quản lý tài chính
• Quản lý tài chính đa quốc gia
• Multinational finance
• Interest rate parity
• Financial statement
• International trade transactions
• Fundamentals of financial management
• Financial statement analysis
• International financial management
• Exchange rates
• Financial environments
• Overview of Financial Management and the Financial Environment
• The financial environment
• Forms of business organization
• Determinants of stock pricing
• Financial instruments
• Practical financial management
• Financial background
• Financial statements
• Financial planning
• Financial system
• Financial ratio
• IT financial management
• Setting the scene
• IT financial management maturity
• Parameters influencing IT financial management
• Costs of IT financial management
• More quantifiable benefits
• Overview of roles
• Hospitality financial management
• Hospitality industry management
• Analysis of financial reports
• Analyzing financial statements
• Management decision making
• Foundations of financial management
• Review of accounting
• Financial analysis
• Financial forecasting
• The financing decision
• Financial leverage
• Current asset management
• Paper F7
• Revision kit 2016
• Management Financial
• Financial Management Exam Review
• Review of Financial Management
• Study text 2016
• Lecture Multinational financial management
• International financial reporting standards
• Foreign exchange risk management
• Financing decisions
• Investment decisions
• Role of management
• International cash management
• Cash flow analysis
• Centralized cash management
• Intermediate financial management
• Financial options
• Corporate valuation
• Corporate governance
• Financial markets
• Cash flow
• Analysis of financial statements
• Ratio analysis
• Interest rates
• Financial institutions
• Forecasting sales
• Business environment
• Limited liability company
• Common size analysis
• Statement analysis
• Break even analysis
• Break even point