标题: Another Exam 2PM Q: Econ/PPP [打印本页] 作者: Spongebob 时间: 2013-3-31 13:03 标题: Another Exam 2PM Q: Econ/PPP
Exam 2 # 112:
In this Q you have to find out what the future spot rate should be and then compare to the actual future spot rate to say if the Canadian $ appreciated or depreciated in real terms. So the way I did it was with PPP: $0.5 x (1.02/1.07) = $0.476. But the solution says to do $0.5 x (1-0.05) = $.475. I know that I’m being a stickler and it’s only one thousandth of a decimal point off, but I’m asking about the method used–iisn’t Schweser wrong? I feel like they’re using a “simplistic, rough estimate” or guess and my way (PPP) is correct. Does anyone remember this Q? Thanks.作者: KungFuPanda 时间: 2013-3-31 13:03
You got basically the same number and should have the same answer. It’s the same thing as nominal=real+inflation - this is technically not the right way as it should be nominal=(1+real)x(1+inflation)-1, but you would be off just a bit.作者: SkipE99 时间: 2013-3-31 13:03
ya but i didnt use nominal = real + inflation. i used PPP to find the theoretical spot rate in one year.作者: chunty 时间: 2013-3-31 13:04
(1 + a) / (1 + b) is approximately equal to a-b when a and b are relatively small #s.
so you could do it either the long way as 1.02/1.07 or (1-0.05) and as you yourself have attested the number is not a whole lot different, in the final analysis.作者: Chuckrox 时间: 2013-3-31 13:04
last minute question if anyone can help.
not really understanding the reasoning behind the answer. Nominal spot rate in one year is .350 C/$ and Future spot rate is 0.476
Doesn’t this mean C appreciated in real terms?
obviously not, but can someone explain to me why.作者: DarienHacker 时间: 2013-3-31 13:04
in first year, .35C bought one dollar.
in second year, .476C bought one dollar.
you needed more C to buy a dollar.
C got weaker.
