Week 05 (text Chapter 4)
5.1 Consider the following statement: “Because all the parity conditions hold true in world capital markets, then we expect to see fixed exchange rate regimes being adopted by countries around the world.” Please explain your opinion about this statement.
5.2 Suppose all the parity conditions noted in Chapter 4 held empirically. Would you, as a CFO of a large MNC, wish to seek advice from currency forecasters? Please justify you views.