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5 July, 11:23

Assume that the Uncovered Interest Parity (UIP) holds. If the rate of return on a euro asset is 22 percent and the rate of return on a comparable dollar asset is 55 percent, the expected rate of dollar depreciation must be

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Answers (2)
  1. 5 July, 12:08
    0
    The answer is rate 33. Therefore,

    Refer below for the explanation.

    Explanation:

    As per the question,

    Euro asset is 22 percent and the rate of return on a comparable dollar asset is 55 percent,

    Return on comparable dollar asset - return on euro asset

    = 55% - 22%

    = 33 expected rate
  2. 5 July, 12:49
    0
    33

    Explanation:

    The expected rate of return of dollar = return on comparable dollar asset - return rate on euro asset

    = 55 - 22

    = 33
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