The spot rate on the Hong Kong dollar is 7.75. Interest rates in Hong Kong are expected to be 6 percent while they are anticipated to be 2.8 percent in the U.S. What is the expected exchange rate two years from now?
A) HK$8.0000
B) HK$8.1808
C) HK$8.2539
D) HK$8.3778
E) HK$8.4141
Correct Answer:
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