FORMULAS FOR 3FC3

what formula for finding real interest rates

fisher effect

formula for expected future exchange rate

interrnational fisher effect

forward exchange premium (discount)

Interest Rate Parity

forcasting exchange rate for x amount of years

PPP

Nomial value

1/ amount

real interest rate fomrula

nominal - inflation

Nominal Exchange Rate define

How much one currency is worth in another.

purchasing power parity

Goods should cost the same no matter the currency after converting currency

Real Exchange Rate

The price of foreign goods compared to domestic goods.

Fisher Effect:

The relationship between nominal/real interest rates, and expected inflation.

International Fisher Effect (IFE):

countries with higher interest rates will see their currency value fall (depreciate) against countries with lower interest rates.

Interest Rate Parity (IRP):

investing in one country versus another should yield the exact same return