Project #83969 - Investment homework: subject matter spot exchange rate

Two countries Great Britain and the US, produce just beef. Suppose that the price of beef in the US is $2.80 usd per pound and in Britain it is $3.70 per pound - euro

1) According to the PPP theory, What should $/euro spot exchange rate be?

2) Suppose the price of beef is expected to rise to$ $3.10 in the US and to $4.65 euro in Britain. What should be the one year forward $/euro Exchange rate?

3) giving your answer to parts A and B and given that the current interest rate in the US is 10%, what would you expect the interest rate to be in Britain?

Please show all work

Subject Business
Due By (Pacific Time) 09/27/2015 10:00 pm
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