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T5 Q2
May 12, 2016 1:22:39 GMT
Post by K on May 12, 2016 1:22:39 GMT
Im just wondering about the definition of e that you gave in the question "e is the price of the home currency in terms of the foreign currency". Shouldn't it be the price of foreign currency in terms of the home currency? Because the answer in part a also says "when the expectations are fixed, if the home interest rate rises then the exchange rate must rise (appreciate)". if e were "home currency in terms of the foreign currency", it would not appreciate if the exchange rate rises but depreciate.
Thanks
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T5 Q2
May 12, 2016 1:53:37 GMT
Post by K on May 12, 2016 1:53:37 GMT
Hi, sorry i was a bit messed up with the definition. I got it now. the question is correct. Thanks!
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